This is a list of the top ten things you simply must know about administration…
- Administration is a legal process that allows a company to continue trading while a plan is created to either rescue the company or sell its assets.
- The main goal of administration is to rescue the company as a going concern, but if this is not possible, the goal shifts to achieving a better result for the company’s creditors than would be likely if the company were immediately wound up.
- An administrator is appointed by the court or by the company’s directors, and takes control of the company’s affairs, the powers he has including being able to sell assets and make decisions about the company’s future.
- The administrator must act in the best interests of the company’s creditors, not its shareholders or directors.
- Creditors can propose a voluntary arrangement, which is a plan to (typically) short settle the company’s debts over an extended period of time.
- Administration can lead to the business and assets being sold as a going concern, which can help preserve jobs and allow the business to continue operating.
- Administration does not necessarily mean the end of the company, and it is possible for the company to exit administration and continue trading.
- Administration does not write off the company’s debts and liabilities, the company remains liable for them.
- Directors can be held personally liable to contribute towards the debts if the company goes into administration if they do not act properly such that the creditors lose out, so it is important for them to seek legal advice early if they are considering this option.
- It is important for company directors to understand the impact that administration can have on the company, its employees, and its creditors, and to seek professional advice before making any decisions as once the decision is made, there is no going back.
If you would like to know more about administration and how it might benefit your company, call Paul on 07813102014