The Company Administration Process – Simplified

The Company Administration process is usually seen as quite complex, and it often is, although sometimes it can be fairly quick and straightforward. It all depends on the specific circumstances of the company involved. However, the main steps in the process are the same – it’s how the administrator deals with these steps that really counts.

For those who are less familiar with the administration process, we’ve put together this infographic which simplifies the process. Full details of the Administration Process can be found in the insolvency legislation that makes up the Companies Act, 2006.

Click here to some testimonials from the company administrations that our teams in London, Brentwood, Salisbury, Bournemouth and the Thames Valley have been appointed to, and authorised to work on.

Company Administration

How Does the Company Administration Process Start?

Administration is an insolvency procedure that is used when it is considered that at least part of an insolvent business can be sold or salvaged, with the administrator acting in the best interests of the creditors, as is their statutory duty.

Once the decision has been made to opt for administration, the company directors can choose to appoint an administrator. Often several administrators are considered before the appointment is made. However, holders of floating charges (often a bank or banks) can force the appointment of an administrator if the company has not upheld the conditions of any debenture agreement.

Issues that need to be considered prior to the appointment include:

What Happens When the Administrator is Appointed?

The administrator, who, by law, must be a Licensed Insolvency Practitioner, has 8 weeks to send out the formal proposals for the administration to all of the creditors both unsecured and secured creditors. A creditors’ meeting must also be held. The proposals will include:

The proposal must be passed by the creditors before the administration can proceed. However, as part of their statutory duties, the administrator is required to examine all other options, including debt restructuring and other formal insolvency procedures and recommend an alternative to administration if all the evidence points in that direction. For example, it might be that the administrator recommends a liquidation process if there is very little chance of salvaging a recovery.

The Creditors Meeting and the Statement of Affairs

The Meeting of Creditors must take place within 10 weeks of the process starting, with each creditor given at least 14 days’ notice of the meeting. The meeting no longer needs to be a physical meeting, following the introduction of the New Insolvency Laws, 2016, unless more than 10% of creditors request a physical meeting.

Once the creditors’ meeting has taken place, the administrator has to send a progress report on the administration at least every 6 months to the creditors. The administrator must also instruct the company to provide a Statement of Affairs. This document details the company assets and liabilities, its cash-flow, amongst other things and including whether any of the assets of the company are subject to a fixed or floating charge. The Statement of Affairs must form part of the administration proposal.

Providing the proposal is accepted by the creditors, the administration process can proceed.

The Administration Exit

At the end of the process, there are a number of possible outcomes, as the infographic highlights:

Contact us for Help and Advice on the Company Administration Process

If your company is facing insolvency or has already become insolvent (can no longer meet its financial obligations and is unable to pay its creditors) and is at risk of being placed in administration, please contact us or call our Insolvency Professionals on any of the numbers, below, for a FREE initial discussion.

Our insolvency practitioners have been appointed as administrators of many companies and we can explain things in detail and help you every step of the way.

Our first aim is always to see if we can find a way of saving a company and avoid it being liquidated and dissolved. If company directors spot the signs early enough – from cash flow problems to debts mounting up, foir example – then the chances are that a formal insolvency procedure can be avoided through restructuring, debt management and the raising of finance. If a formal insolvency procedure is required, such as administration, data from R3’s 2021 survey The Value of the Profession: how restructuring and insolvency supports the UK economy, shows that Insolvency Practitioners rescued a total of 7,200 businesses in 2019 and saved 297,000 jobs, with Administrations representing 34% of the total number of formal insolvency procedures.

If worrying about your business is keeping you up at nights, it is time to speak to one of our insolvency specialists. The sooner you contact us the more we are likely to be able to help. The initial consultation is free, although of course we charge if we are formally engaged by you.

Also K&W Recovery, trading as Antony Batty and Company, Thames Valley:

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