Business or Company Administration is a way of stopping any legal action against your business while an insolvency practitioner tries to save it. It is a formal process where an insolvency practitioner is brought in to act as the company administrator for an insolvent business. The aim to for the administrator to work towards saving the business or finding the best outcome to the situation for all stakeholders.
Administration could be a lifesaver for your business and at Frost Group we have helped many clients with this procedure.
Administration is a legal process that creates a legal stay against creditor action. And it also gives you a breathing space as a business to develop further proposals that you can put to creditors. These could be restructuring or refinancing - or selling some or all of the business.
Administrators can be appointed by Court Order or out of Court depending on the applicant. The administrator will assess the position and agree a strategy for action. The directors no longer manage the business, but usually assist the administrator when continuing to trade or considering the exit strategy.
Applicants may be the company's directors, the holder of a floating charge, a creditor or a shareholder.
As licensed Insolvency Practitioners, Frost Group can be appointed as administrators.
Under the Enterprise Act 2002, administration has been streamlined. You no longer need petitions, independent reports and a court order. You simply file various notices in court. A licensed Insolvency Practitioner (IP) will be appointed administrator and will manage your affairs for your creditors.
If this sounds like your business then an administration could help:
Administration will only occur if one (or more) of the following objectives can be achieved:
For a business to go into administration, there are several circumstances that need to be met:
When a business goes into administration, the first step is typically searching for a buyer. While this is happening, the company will inform shareholders, creditors and employees of the state of the company. If a buyer is found, the company will change in line with the new goals and strategy for the future. If the business is not sold, the appointed insolvency practitioner will choose the best process for the company, and this will begin instead.
There are several steps to the company administration process, all of which should be carried out with the assistance of a qualified insolvency practitioner. They will help directors to understand their responsibilities, duties and legal obligations.
The first step of the administration process is to appoint an administrator, which can be carried out by the directors of the company. All that’s required in this situation is that the appropriate forms are completed and submitted to the court. If there are secured creditors holding the benefit of floating charges, then five days’ notice is required of the administration being served. Then an extensive proposal is put together and provided to all creditors.
The details of the creditors need to be gathered and the administrator must notify them of their appointment, which will also be advertised publicly. Once the appointment has been made, the directors must provide the administrator with a Statement of the Company’s Affairs (SOA) within 11 days. This details the company’s assets and liabilities, along with any assets which are subject to fixed or floating charges.
There’s a time limit of 8 weeks placed on the administrator to submit proposals to the company’s creditors of any intended strategies, including full details of the administrator’s appointment, a copy of the SOA and how they foresee the administration concluding. Within 10 weeks of the day the company entered into administration, there should be an initial decision procedure to approve these proposals. Creditors must be given at least 14 days’ notice, but this can be extended by the creditors or by the Court.
In some situations, the administration process can take several months. If it exceeds six months, the administrator mist report to all creditors and explain the progress made so far, as well as file these reports to Companies House.
The administration process ends when the purpose of it has been reached. Typically, administration ends automatically after 12 months, but it can be extended if more time is required to meet the statutory purpose and finalise the administration matters.
There are several options available to companies in administration. One of the main options includes putting the business up for sale on the open market or in the form of a pre-packaged sale, which involves marketing the business prior to an administrator being appointed. A pre-pack administration is a way of protecting the brand and the business itself, along with the company assets.
A Company Voluntary Arrangement (CVA) can also be chosen by the administrator if it’s believed to a viable option. An approved CVA enables the business to exit administration, with monthly repayments of a single amount which is distributed to creditors.
If after administration, there are still assets which need to be realised or a dividend to pay to creditors, this can be done by putting the business into liquidation. If there’s no need to put the company into liquidation, company dissolution may occur when there is no money or assets with which to pay a dissolution to creditors, at which point the company will be closed and removed from Companies House records.
The funds from the sale of assets are distributed among creditors in the following order:
Please call us on 0345 260 0101 to talk about Company Administration with one of our licensed Insolvency Practitioners at our offices in Croydon and London.
Our nationwide company Administration service operates from our offices in Croydon and London. If you are in a hurry to begin the company Administration process and are close to one of our offices we can usually arrange for an Insolvency Practitioner to see you within the hour.
If you want to stop any legal action or process against your business talk to Jeremy Frost or Patrick Wadsted about company Administration.
Our team member below will be able to help with all your questions
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At Frost Group, we want to make things as easy as possible for you. That is why, if you can’t come to us, we’ll come to you. We operate face to face, nationwide meetings, wherever is most convenient for you.