What is an Administration?

The Court can make an order to appoint an Administrator to deal with a company’s affairs.  The administrator has to be a licensed Insolvency Practitioner.

The purpose of the administration is (1) to save the whole or part of the business (2) to approve a Company Voluntary Arrangement “CVA” (3) to agree a compromise arrangement, or (4) to realise assets more favourably than would be possible in a liquidation.

The company, its directors, or any creditor can petition for administration but in practice the creditors will not have the information they require to convince the Court that administration is going to be the correct procedure. Creditors generally rely on liquidation, or the threat of it.

When a company goes into administration, a winding-up order cannot be granted or a receiver be appointed.  There are also restrictions on diligence and starting legal proceedings.

The administrator takes control of the company’s property and prepares proposals to meet the purpose of the order. A creditors meeting is called and if the proposals are approved then the administrator manages the business to meet those objectives.

Information

The Administrator must advertise his appointment in the Edinburgh Gazette and send a copy of the Court order to Companies House.  Within three months he has to send in details of the proposal and every 6 months accounts have to be filed at Companies House.  The Court will decide when the administration order is discharged, and again the administrator must lodge details.