By nature, putting a business into administration is often a highly time-sensitive process, with often stressful financial pressures and obligations involved. That’s where we can help here at Farleys Solicitors. We have more than 60 years of experience behind us, giving our administration solicitors a wealth of passion and specialist expertise. We focus on making the entire administration process go as smoothly and efficiently as possible, whether you’re a company director, a creditor, or an insolvency practitioner appointed as an administrator.
Administration is a formal insolvency procedure designed to allow for the reorganisation of a company, or the realisation of its assets, by a licensed insolvency practitioner. During the process of administration, the company is protected by a statutory moratorium which prevents hostile creditors from taking aggressive action to enforce claims against the company.
Small businesses with the fewest assets and poor cashflow are usually likely candidates for voluntary liquidation, so administration is instead best suited to reasonably sized companies with stable profitability and cashflow.
Companies generally enter administration through one of two routes: either by order of the court, or by the out-of-court procedure.
A court order can be instigated by one of several parties, including the company itself, its directors, or its creditors. (These are normally the parties most likely to instigate a court order.) The process may also be initiated by a liquidator, or by the supervisor of a Company Voluntary Agreement, who will do so by making a formal application to the court.
The out-of-court action is simpler, but still requires certain documents to be lodged with the Court. It may be voluntarily set in motion by the company, its directors, or someone who holds a qualifying floating charge over some or all of the company’s assets. In the event that the company is not able to meet certain critical obligations, the floating charge empowers the holder to appoint an administrator without a court order.
From the moment an insolvency practitioner is appointed as the company’s administrator, it is officially regarded as being ‘in administration’. The administrator may be appointed by the Court, by the company itself, or by the holder of a qualifying floating charge.
Once appointed, the administrator will then take charge of the company’s business and assets. They will work towards achieving one of the following aims:
Rescuing the company is always a priority for the administrator over closure, which remains a possibility but only as an absolute last resort.
The administrator begins by making an informed judgement as to whether a company can be kept as a ‘going concern’ – which is a business that’s deemed to be able to meet its financial obligations as they fall due.
If trading is still viable for the business – whether it’s a matter of days or months – then the process essentially becomes that of a large-scale marketing operation with two core goals: searching for a buyer, and keeping the business trading until one can be found. The pressure of the company’s existing financial obligations often means that the administrator must work quickly to procure an early sale.
On the other hand, if the company is not viable as a going concern, the foremost priority of the administrator becomes to maximise the value of the assets to the benefit of the creditors, normally selling the business for the best possible price on the shortest timescale possible.
A pre-pack sale provides one of the most effective ways to do this. This is where the sale of the company is negotiated with a buyer before an administrator is officially appointed. The administrator can then finalise the sale upon (or shortly after) assuming their role. This provides some measure of protection for the business against the inevitable costs of trading, which helps to preserve its overall value.
Farleys Solicitors LLP is a friendly, trusted, and straight-talking local firm with over 60 years of experience in serving clients in Blackburn and across the North West. Our administration solicitors draw upon a wealth of knowledge and industry-specific expertise in order to answer all of your most pressing questions regarding company administration.
Our experts realise that every situation is different, which is why we always begin by sitting down with you for a detailed discussion about your circumstances and those of the business in question. This way, we can work to find a solution that works best for you.
Feel free to get in touch with our Blackburn Corporate Insolvency Solicitors today on 01254 367855 or contact us by email.
If a company can’t be kept as a going concern, in most cases the main task of the administrator is to maximise the value of the assets for the benefit of the creditors. In almost every case the best way to do that is to try to sell the business for the best possible price in a reasonably short time scale. Frequently this can involve what is known as a ‘pre-pack sale’