Putting your business into Administration is not something you will ever thought of doing but it may become an option you have to seriously consider if your efforts at turning your business round are failing.
Why? Well the there are a number of reasons:
- the procedure does not involve lengthy Court processes and is fairly streamlined
- you will find it to be a quick and cost effective method of preventing or delaying Creditors from taking hostile action against your business giving you and your fellow Directors valuable time to work with us in looking at all the other options that could see your business emerge from its difficulties for the benefit of all involved in it
- the emphasis is on achieving the rescue or reorganisation of your business.
The relatively new streamlined procedure means that an Administrator can usually be appointed either by you and your Directors, the company itself or the holder of a “qualifying floating charge.”
Objectives of an Administration
These are set out by law in order of priority:
- the primary objective is to rescue your business as a going concern
- if that cannot be achieved an Administrator will consider the alternatives
- can he achieve a better result for your Creditors as a whole than would be likely if the business was put into liquidation or
- should he sell property for the benefit of secured or preferential Creditors
Advantages of Administration
- your business is protected from legal action from its Creditors because a statutory moratorium kicks in giving you and the business vital breathing space in which you can work on your financial difficulties without having to spend time fighting off litigation from your Creditors
- during this moratorium you may decide to negotiate a sale of your business on much better terms than would be the case if you are forced into liquidation or bankruptcy
- if you can sell your business in this way you will effectively rescue it and ensure continuity of service with your customers and suppliers
- An Administration will normally last for one year, although this can be extended by Application to the Court. It can be brought to an end sooner than that
- if the objectives of it have been achieved
- if the objectives are simply not capable of being achieved
A company can be dissolved at the end of the Administration. Usually what happens is that there is a Creditors’ Voluntary Liquidation.
Our Corporate Recovery Team has considerable experience in this field and close links with other professionals who can guide you through the process of
- putting your business into Administration
- helping Clients to rescue their businesses as going concerns, sometimes by a sale back to the existing owners or Directors