Require Immediate Support? Free Director Helpline: 0800 644 6080

Real Business Rescue

Free Director Helpline: 0800 644 6080

What are the exit routes out of company administration?


Exit from administration - what options are available?

A company can exit company administration through a Company Voluntary Arrangement (CVA) if it owes money to creditors, Creditors' Voluntary Liquidation (CVL) if it is no longer viable, or continue trading if the financial health of the business is restored.

What happens to a company after administration?

For a company experiencing financial distress there are a number of formal insolvency options which can be employed to help rescue the business and protect creditors from further losses. One of these options is placing the company into administration.

background curve

Take Our Free 60 Second Test

Get an instant understanding of your:

  • Debt and Asset Position
  • Formal Insolvency Options
  • Next steps

Plus much more ...

Start The 60 Second Test
apps on mobile screen

Gives a company breathing space

Administration is not a permanent solution to a company’s problems; instead it is a temporary measure which is used to give the company the opportunity to turn around its fortunes, or else ensure a better return to outstanding creditors. An administrator – who must be a licensed insolvency practitioner – will be appointed; they will seize control of the company, and will begin assessing options for the future of the business, whether that is by formulating a rescue plan, or else ensuring a more positive outcome for creditors should continuing to trade not be possible.

Corporate Restructuring Options

When a company is in difficulty, sometimes a process of financial and/or operational restructuring is needed. From CVAs through to Administration, there are a range of rescue and recovery options to help you get back on track.
Learn more about restructuring by calling our team -  0800 644 6080

60 Second Test Find Your Nearest Office

Purpose of the administration

The administration must serve a purpose, and cannot be used as a way to prop up a failing company indefinitely. The Insolvency Act 1986 specifies three ‘statutory purposes’ of administration, one of which needs to be deemed achievable if a limited company is to enter administration. They are:

  • to rescue the company as a going concern, or
  • to achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up without first being in administration, or
  • realising the company’s property in order to make a distribution to one or more secured or preferential creditors

A company in administration is afforded an element of legal protection through what is known as a moratorium. This prevents the company’s creditors from initiating legal action to recover money it is owed. A moratorium is often a huge benefit to an ailing company as it provides valuable time and space through which a rescue package or a more advantageous realisation of assets can be effected.

Exit from company administration

There is no defined time limit on how long a company can remain in administration, however, the administrator has an obligation to do his or her duties as quickly as is practical and sooner or later the company will need to exit administration.

There are a number of ways this exit can be executed; the most appropriate option depends on several factors including the company’s financial position and its future viability.

  • Continuation of trade

It may be that the moratorium provides enough time for the company to resolve its financial issues through the sale of assets, sourcing additional funding, or else reaching an informal agreement with creditors on how to pay back outstanding debts.

If this is the case then the administrator, once satisfied the company was in a stable position, would relinquish control of the company with the directors resuming their day-to-day activities. The company would continue to operate and would no longer be seen as being in insolvency proceedings.

For many companies, however, administration acts as a precursor to an alternative insolvency arrangement in order to resolve the company’s issues.

Can’t pay CBILS or Bounce Back Loan?

Don't worry - there are thousands of other company directors in the same position. If you are struggling to keep up with your Covid loan repayments, speak to a member of the Real Business Rescue team to discuss your options. It's Free & Confidential.
The team are available now -  0800 644 6080

  • Company Voluntary Arrangement (CVA)

In instances where the company is struggling to stay afloat under the pressure of cumbersome historic debts, yet the business is otherwise performing well and appears to have a bright future, a Company Voluntary Arrangement (CVA) may be recommended.

As a formal rescue procedure, the aim of a CVA is to allow a struggling company to trade out of a period of financial distress by using future profits to pay existing debts.

A CVA can be seen as a formal payment plan a company enters into with its outstanding creditors. A licensed insolvency practitioner will draw up a payment schedule and present this to the company’s creditors. At least 75% (by value) of these creditors must agree to the proposal in order for the CVA to be accepted and take effect. Should the required number of creditors give their consent, the CVA becomes legally binding on all parties.

This means the insolvent company must make the agreed payments on time and in full, while creditors must respect the payment plan and are not permitted to ask the company to pay anything above and beyond this amount, nor are they able to commence legal action so long as the company adheres to the terms of the CVA.

In the vast majority of CVAs, a portion of the company’s outstanding debt will be written off, and the company may also undergo an element of internal restructuring in order to cut operating costs.

  • Creditors’ Voluntary Liquidation (CVL)

While administration is often used as a rescue procedure, it can also be employed as a pre-cursor to placing the company into voluntary liquidation through a process known as Creditors’ Voluntary Liquidation (CVL).

A company may be liquidated if it is decided during the administration that the company is no longer viable and has very little chance of becoming a profitable entity in the future. In other instances, the eventual liquidation may have been decided upon as the preferred course of action from the start, however, creditor returns would be enhanced by placing the company into administration first.

Liquidation following administration works in much the same way as other CVLs; however, it is likely that in these cases, the business’s assets will have already been sold prior to the liquidation as part of the administration process. If this is the case, the entry into CVL makes it possible for the realisation of these funds to be distributed to creditors.

Need to speak to someone?

If your company is struggling with unmanageable debts, squeezed cash flow, or an uncertain future, you are far from alone. We speak to company directors just like you every single day, and we are here to give you the help and advice you need.
Call our team today on 0800 644 6080

How Real Business Rescue can help

If your company is experiencing financial difficulties and you are considering the possibility of administration, ensure you take advice from a licensed insolvency practitioner at the earliest opportunity. At Real Business Rescue we have a nationwide network of offices and over 100+ licensed insolvency practitioners. Contact our expert team today for immediate help and advice or to arrange a completely free initial consultation.

reviews io logo

Real Business Rescue are here to help

Still unsure whether liquidation is right for your company? Don't worry, the experts at Real Business Rescue are here to help. Our licensed insolvency practitioners will take the time to understand the problems your company is facing before recommending the best course of action going forward based on your own unique circumstances.

  • UK’s Largest Liquidators
  • 100+ Offices Nationwide
  • 100% Confidential Advice
  • Supported 25,000+ Directors
Meet The Team
Team Of 4

Team of Qualified Experts

Trusted team of experts on hand to assist

Meet The Team
Rbr Accreditations Blue

Looking for immediate support?

Complete the below to get in touch

Here at Real Business Rescue we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See PRIVACY POLICY
10,000+ Tests Completed

Free 60 Second Test

For Ltd Company Directors

Get An Instant Understanding Of Your:

  • Debt and Asset Position
  • Director and Liability Review
  • Next Steps

Plus much more ...

Real Business Rescue Recommended
  • UK's leading business funders
  • Free Brokerage Service
  • Full Market Access
  • Over 30 years' experience
  • Strong relationships with HMRC
  • Support from start to finish
  • 10,000 potential buyers
  • 12,000+ Businesses Sold
  • 60+ Years Experience
Next Steps

We provide free confidential advice with absolutely no obligation.
Our expert and non-judgemental team are ready to assist directors and stakeholders today.