What is Administration?

Your company is said to be ‘in administration’ when it is under the control of an administrator, an insolvency practitioner who is appointed in conjunction with the courts.

The administrator is responsible for recovering money on behalf of all the creditors. This could be through the restructuring, sale or winding up of the business.

The administrator must take into account the needs of all the creditors, not simply the largest.

As with other insolvency or business recovery measures, you should take professional advice before agreeing to the appointment of an administrator.

Administration can lead to a company voluntary arrangement, as a way of settling debts while continuing to trade.

Who benefits from administration?

You benefit because your financial position cannot get any worse, preventing you from further financial risk.

Creditors benefit because the administrator is working to maximise the repayment of their debts, often by allowing the company to continue trading, meaning that they also keep a customer.

Employees benefit because at least some of them will keep their jobs, if the business continues to operate.

Who can initiate administration?

If the directors of your company are concerned about the firm’s ability to repay its debts, they can choose to appoint an administrator.

Your bank can also appoint an administrator, as an alternative to administrative receivership. This only applies if you have a debenture taken out after 15 September 2003.

To survive administration, a business will require additional working capital

Your business can continue throughout, and after, the period in administration. If it does, it should come out stronger, having been restructured.

However, the process will usually demand a fresh injection of cash.

At Business Recovery, we have helped hundreds of firms to raise the working capital they need to keep the cash flowing.

Our experts work with a strong network of individuals and organisations who provide funding for both start-ups and firms looking to improve their financial situation. It costs you nothing, as our fees are paid by the funders.

If your business needs a fresh injection of working capital, give us a call right now, to find out how we can help you.

In brief

Administration:

– protects a company from its creditors while it restructures.

– the administrator takes over the management of the company.

– it is only suitable for larger firms.