What administration is
Administration is a rescue procedure. A licensed insolvency practitioner, the administrator, takes control of the company to try to save it as a going concern, or failing that to get a better result for creditors than an immediate liquidation would.
The administrator can be appointed by the court, by the company or its directors, or by a lender holding a qualifying floating charge.
The moratorium
While the company is in administration, creditors cannot start or continue legal action, enforce security or repossess goods without the administrator's consent or the court's permission. That breathing space is the point of the procedure, and it applies to you as a supplier or landlord.
How long it lasts and how it ends
Administration ends automatically after one year unless creditors or the court extend it. It often ends in one of these ways:
- The business, or the company itself, is sold. A sale agreed before the administrator's appointment and completed straight after it is called a pre-pack.
- The company moves into a creditors' voluntary liquidation so that money can be paid out to unsecured creditors.
- The company is dissolved when nothing is left to distribute.
What it means if you trade with the company
- Money owed to you from before the appointment becomes a claim in the administration. Submit it to the administrator.
- The administrator may ask you to keep supplying. New supplies made at their request are paid as an expense of the administration, which ranks ahead of old debts.
- If you supplied goods on retention of title terms, tell the administrator promptly.