Administration

A company may go into Administration on a voluntary basis or may be forced into winding up the company if they feel they are not likely to be paid due to various financial difficulties.

Administration is for companies that are solvent but are facing problems with their creditors. Once a company is put into administration this will halt all possible legal action against them whilst allowing the company to trade as a going concern.

The process of Administration begins by either the company or a creditor of the company obtaining an Order from the High Court, the court will then appoint an Insolvency Practitioner as administrator. If your company is under pressure from its creditors you may put it into administration with a company voluntary arrangement (CVA).

The company should put together an action plan stating whether the company is insolvent, whether the company is a viable business, whether any financial backing is required together with a statement of the financial plans for the company.

You should contact a specialist practitioner who will assess your company and recommend which course of action to take ie administration or liquidation. All Directors of the company must be involved in making these decisions.

When a Company does go into Administration certain creditors will get paid first, i.e. secured creditors, these are usually banks and they will have charges made on owned assets or property. Employees will be paid redundancy, then creditors including the Inland Revenue will get a share of the amount left.