I P Services Limited Licensed Insolvency Practitioner
9 Woodhill Road Portishead, Bristol BS20 7EU
Telephone 01275 843555 and Fax 01275 843355
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The Company Administration procedure has been
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 business that would be profitable in the future if it could survive.
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 approach would produce a better result for creditors.
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 was often a costly procedure as it usually involved 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 was therefore normally only suitable for medium to large companies. The new procedure is designed to be less costly and more user friendly. Hopefully it will therefore be realistically available to smaller companies than heretofore.
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.
Peter O'Duffy F.C.C.A., R3, Licensed by ACCA, 1 Woodside Place Glasgow G3 7QF