Legal advice about company administration

What is company administration?

If your company is struggling to pay its debts, and you cannot reach an agreement with your creditors, you will need to appoint an administrator who will seek to prevent your company from being wound up.

If you choose to appoint an administrator, they will notify your creditors and Companies House of their appointment and a moratorium will be put in place to freeze hostile actions by creditors against your company.

Once the moratorium is in place your administrator has eight weeks to decide on the best course of action for your company, and inform creditors, employees and Companies House of their intentions.

The options available to your administrator include:

• The negotiation of a Company Voluntary Arrangement, whereby your creditors are repaid over a fixed period and your company continues to trade.
• Arranging for the business to be sold to another company as a 'going concern'.
• Entering into voluntary liquidation, in which your company assets are sold off until creditors are paid and your company is then closed.
• The closure of the company, if there are no assets that can be sold.

Your administrator will, where possible, attempt to salvage the business and leave you in a position from which you can continue to trade.

Why should I put my company into administration?

The advantages of company administration over alternative options, such as compulsory liquidation or voluntary liquidation, include the fact that you can prevent creditors from taking further action by implementing a moratorium.

When creditors are attempting to claim back the money they are owed immediately, it can put you in an impossible situation, with the threat of your company being wound up looming over your head.

Administration temporarily curtails the power of creditors and staves off the threat of liquidation while you take steps to achieve a better outcome for everyone concerned.

I am owed money by a company in administration – what should I do?

As a creditor of a company going into administration, the administrator will write to advise you of their appointment. They must then contact you again within eight weeks, outlining their intentions in a strategy document known as the ‘administrator’s proposals’.

You will be kept informed of the progress by the administrator, who will send you a report every six months.

If you are unsure of your legal rights as a creditor during the administration process, we can put you in touch with one of our specialist insolvency solicitors.

I believe my business may need to go into administration – what should I do?

If you are considering putting your business into administration, it is likely that you are already coming under pressure and scrutiny from creditors, landlords, shareholders or governing bodies.

By seeking legal advice before taking any steps towards appointing an administrator, you can ensure that administration is the right course of action for your business, and doesn't overstep any laws or regulations.

Insolvency specialists from First4Lawyers can help you through the administration process, and advise you on the best option.

It could be that you'd be suited to a quick solution, known as a ‘pre-pack’ administration, or you may need a more comprehensive process.

Contact us to discuss your options and learn more about how we could help rescue your business from the prospect of insolvency and liquidation.