| The
Company Administration procedure
was changed dramatically under The Enterprise
Act 2002 which came into effect as regards companies
on 15th September 2003. |
| |
If
an immediate corporate voluntary arrangement is
not practicable, the Administration procedure
can ideally be used to rescue a company when it
is insolvent yet has an underlying potentially
profitable and viable business. |
| |
| The
company itself, its directors, a floating charge
holder and one or more creditors can apply to
Court for an Administration Order and for appointment
of an Administrator. |
| |
The
role of the Administrator is to take total control
of the company. He has the power to fire and hire
directors. He must act so as to rescue the company
as a going concern unless another course of
action would
produce a better result for creditors, for
example sale of the business and assets. |
| |
An
Administration Order can relieve pressure from
creditors of the company in order to create time
to work out a full or partial payment scheme with
creditors. |
| |
While
an Administration Order is in force, with minor
exceptions no Liquidator or Administrative Receiver
may be appointed, and no steps may be taken to
seize company assets except with the consent of
the Administrator or the leave of the Court. |
| |
Administration
is often a costly procedure as it usually involves
the ongoing hands on costs of an Insolvency Practitioner
and often a Solicitor both at the commencement
of the procedure and during the course of the
Administration. It is therefore normally only
suitable for medium to large sized companies. |
| |
This
information is written in general terms and cannot
be fully comprehensive. Its application to particular
circumstances will depend on specific facts. The
views and suggestions set out are not intended
to constitute professional advice or to be a substitute
for specific advice. |
