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Written by Keith Tully
Going into administration can be an intimidating process, especially if you’re not familiar with the terminology and procedures involved. Although an administration could end up providing a positive outcome in the long-term, it could also mark the beginning of the end of your business, depending on the actions taken by the appointed administrator. Regardless of who appoints the administrator, they are required to act in the best interest of the insolvent company’s creditors as a whole. If you’re concerned about what is going to happen when your company goes into administration, or would simply like to learn more about the subject, consider the following information:
What Does Going Into Administration Mean?
Going into administration effectively means your company is being taken under the management of an interim chief executive – who must be a licensed insolvency practitioner (IP) -- appointed by the courts, your creditors, or your company directors. If you are being petitioned to court and wound up via compulsory liquidation it may still be possible to request a Court Order to go into administration, however a 5-day notice will need to be given to all floating charge holders before such an order will be granted. The government and most experts recommend some sort of recue procedure like a company voluntary arrangement (CVA) following an administration, as this would allow the company enough leniencies to repay outstanding bills without being pressured by creditors.
Can You Stop your Company From Going Into Administration?
Once an administrator has been appointed there is little that can be done to reverse the process. However, if action is taken early it may be possible to substitute a conventional administration with the more ideal pre-pack administration, which could allow the company directors to form a new corporation that would then assume the assets of the old one and continue operating virtually unaffected. Knowing when insolvency is a risk and immediately taking preventative measures is the only way to guarantee the avoidance of an administration procedure. In cases where liquidation or receivership seems imminent, going into administration would be the least detrimental outcome to the company.
How Long Does Going into Administration Take?
The process of administration can last anywhere from a few weeks to up to year or more, depending on the circumstances. However, the administrator is always obligated to perform all duties as soon as possible, so speedy administrations are more common than slow, drawn out ones. Administrators have a maximum of 8 weeks to send out their administrative proposals (their plans for the company) to creditors. These proposals typically include all of the details about events that led up to the administration, how the administrator plans on achieving the goals of administration, and the most likely anticipated outcome.
If you need help with any issues related to company administration, please feel free to contact us today on 0800 2316040. We can accurately assess your situation during a free consultation and aid in the development of a suitable course of action.Linked In Google+ Twitter