Administration

This procedure is useful where:

• Cash-flow pressures are intense but there is still a good business to preserve.
• There is a need to quickly sell on the business of a technically insolvent company
• It simply isn’t possible to persuade creditors to agree out of court or through consensual means to an alternative course of action (such as a compromise or restructuring).
• Agreement is not possible within a manageable time-scale. For example, negotiations with the majority creditors may be proceeding well, whilst minority creditors are pursuing the company through legal process that threatens to bring the company down prematurely.
• The company is insolvent and the directors are concerned about the risks of wrongful trading.

In these circumstances it may be advisable to place the company in Administration - a legal process that requires the appointment of a licensed insolvency practitioner as Administrator. Begbies Traynor are licensed insolvency practitioners so we can accept appointment as Administrators.

Administration creates a legal stay against creditor action, whilst also providing a breathing space for developing further proposals that can be put to creditors. Under the Enterprise Act 2002, which came into effect on 15th September 2003, this process has been considerably streamlined and no longer requires petitions, independent reports and a court order – it now merely requires filing in Court.

The purposes of the Administration must be met (such as approving a Company Voluntary Agreement – see below), and if the company is solvent, it can exit from Administration and revert to the executive control of its own management.