Company Administration has now established itself as a familiar procedure to help insolvent companies.
The current Company Administration procedure was introduced by the Enterprise Act 2002. The Enterprise Act streamlined the procedures already in place from the Insolvency Act 1986.
The lower cost and improved speed of the application process for Company Administration have been crucial in its increasing popularity.
Another reason for the increasing popularity is that it can be initiated by both the company and by secured lenders.
One key aspect of the Company Administration can be achieved before the formal appointment of an Administrator or Insolvency Practitioner to the company. The Moratorium can be achieved by a filing at Court by the Insolvency Practitioner who is expected to be appointed as Administrator.
The moratorium will protect the company from the vast majority of creditor action and will prevent the vast majority of legal processes continuing.
This early stage protection is key in giving a company time and opportunity to consider its best way forwards.
Once a plan is agreed and an Administrator takes office then they are in control of the company. This is where costs can begin to mount.
The idea of an off-market pre-packaged sale of the assets and trade of the company is in part driven by the costs and roles of running a company as Administrator. This pre-agreed sale is called a Pre-Pack Administration.
In 2009 the SIP16 was introduced to make the process of a Pre-Pack Administration more transparent to creditors. This report will highlight why certain actions were taken in order to make clear the decisions behind each action.
A pre-packaged sale to another company could be to either connected or unconnected party to the company in Administration. Either way any sale must be subject to approval by a professional valuation agent that is a third party from the Administrators and the company.
Speak to a Licensed Insolvency Practitioner
To discuss the process of Company Administration or the Pre-Pack Administration option call one of our Licensed Insolvency Practitioners today. There is always someone available to take your call and answer your questions.