Advantages v Disadvantages of Administration
Usually, Administration is used to save all or part of a viable business and to increase the value and the return to the creditors. There is no minimum company size requirement for an Administration.
The advantages of Administration
- There is a Moratorium which protects the business from any legal action and any winding up. A creditor can only wind up the company or remove charged assets with the consent of the Administrator or the Court.
- It gives some time to explore the options for restructuring the business.
- It will help give continuity to the customers and employees if the business can be rescued.
- It is a faster process to get into Administration than liquidation.
- Employees made redundant by Administration in a winding down process can claim their arrears of wages, redundancy, pay in lieu of notice and holiday pay and other claims from the UK Government Redundancy Payments Service. We help process these claims.
The disadvantages of Administration
- There is a loss of control for the directors as the Administrator takes over the supervision of the business.
- There will be an investigation into what happened and why it went wrong, and a report must be made to the Insolvency Service in every case. This report is confidential.
- Employees have an automatic right to transfer to any new business owner. A Creditors Voluntary Liquidation may be a better solution. TUPE does not apply to employees in a liquidation.
- The professional costs can be expensive to keep a company in Administration.
David Kirk did exactly what he said he would. I’d be lost without Administration. Without David, we would have gone bankrupt by now. Really good