Company Administration Advice
Frequently asked questions concerning Company Administration
What is a Company Administration?
A process under insolvency legislation with a view to rescuing a company or its business.
How long does it take to get in place?
It takes as little as a few hours.
What is a protection order under a moratorium for Company Administration?
No creditor can take enforcement action against the company unless the court sees it proper to do so.
I’m a Director/shareholder can I buy assets back from the administrator?
Yes, but you must pay a fair value subject to a professional valuation.
What role do my secured creditors play?
They must be consulted and agree to the plan of action. Remember always take a lender a solution and not a problem.
If a lender is due notice of an intended appointment of an Administrator by a company then the lender has 5 clear business days to consider their position.
What will it a Company Administration cost?
The costs are not extreme; most importantly trading during the administration will need to be funded. A specific estimate will be given. This is often where a pre-packaged deal can be preferred to keep cost of the process down.
Does Company Administration work?
If a clear plan is established they are highly successful.
It should be remembered that an Administration Order is a facilitator and is used as part of a defined plan involving a number of parties and stages.
Will the court allow creditors enforcement in a Company Administration?
Only in exceptional circumstances where a specific creditor is suffering unduly, a court application is required by the creditor.
How long will Company Administration last?
To a maximum of 12 months, exceptionally extended to 15 months.
Who runs the company during Company Administration?
The Administrator runs the company but only once they have been formally appointed, this is not at the moratorium application stage. He or She must be a licensed insolvency practitioner.
I’m a Director, can I still be involved?
Company Directors can appoint an Administrator. In this case typically the company will continue to be run by the Directors under the Administrator’s supervision.
Who else can appoint an Administrator?
Creditors, shareholders or a secured creditor can appoint as well as the Directors.
Can any secured creditor appoint an Administrator?
No, this will need to be a fixed and floating charge holder. This will usually be registered at Companies House. Their charge will be known as a Qualifying Floating Charge.
I’ve heard of a pre-pack, what’s this?
I’ve got a personal guarantee, what happens to this?
Every circumstance is different, but any plan to lenders must account for this, with the aim of minimising exposure under any guarantee whilst remaining within the legislation guide times.
What happens at the end of the Company Administration?
The company could be:
- Sold via a share sale
- Enter a Company Voluntary Arrangement and continue trading
- Sell its assets
- Enter into Liquidation
- Be struck off