Company Administration [2024 Guide]

Company administration is a formal insolvency procedure under English law that provides a company in financial distress with an opportunity to be rescued and continue trading as a going concern, rather than being placed into liquidation. It can be viewed as part of a company rescue procedure if used correctly. The aim of company administration is to protect the interests of creditors while maximising the value of the company’s assets.

The purpose of administration is

1. to rescue the company as a going concern
2. achieving a better outcome for creditors than if the company was wound up: or
3. paying a dividend to secured or preferential creditors.

We set out below an overview of the administration procedure.

Company administration can be applied for by various parties, including the company’s directors, creditors, or the court. A licensed insolvency practitioner is appointed as the administrator. The administrator must act in the best interests of the company’s creditors as a whole.

• Moratorium. Once the company administration begins, a moratorium (or freeze) is automatically imposed, which provides the company with a temporary shield from legal actions by creditors. This allows the company sufficient breathing space to focus on restructuring its affairs without the immediate pressure of creditor claims.
• Rescue or sale. The administrator’s primary duty is to rescue the company as a going concern, if at all possible. This may involve negotiating with creditors, restructuring the company’s debts, or selling the company or its assets to a third party. The goal is to achieve the best outcome for the company and its creditors.
• Creditors’ approval. The company administrator’s proposals for the company administration, including any proposed restructuring or sale, must be approved by the company’s creditors, through a formal decision making process. If the proposal is accepted, it becomes legally binding on the administrator and all creditors, including those who voted against it.
• Distribution of Funds. Once the company administration is completed, administration will exit via another process, usually liquidation and the administrator distributes the proceeds from the restructuring or sale to the company’s creditors in accordance with their legal priority.

In England & Wales, company administration is governed by the Insolvency Act 1986 Schedule B1. The key legislative provisions relevant to the appointment and effect of administration under paragraph 3 of Schedule B1 include:

• Appointment of Administrator. The administrator is appointed by the company, its directors, or a qualifying charge holder, and the appointment must comply with the requirements set out in paragraph 3(3) of Schedule B1 of the Insolvency Act 1986.

• Effect of Company Administration. Upon appointment, the administrator assumes control of the company’s affairs and assets, and any legal or administrative process against the company is generally stayed (halted) or requires the administrator’s consent, as per paragraph 3(2) of Schedule B1 of the Insolvency Act 1986.

• Administrator’s Objectives. The administrator’s primary objective is to achieve one of the following: (a) rescue the company as a going concern, (b) achieve a better result for creditors than would be likely if the company was wound up, or (c) realise the company’s assets to make a distribution to secured or preferential creditors, as per paragraph 3(1) of Schedule B1 of the Insolvency Act 1986.

• Administrator’s Powers and Duties. The administrator has wide-ranging powers and duties, including the power to manage and realize the company’s assets, negotiate with creditors, propose a Company Voluntary Arrangement, or sell the business and assets of the company, as per paragraph 3(4) of Schedule B1 of the Insolvency Act 1986.

• Creditor’s Rights. Creditors have the right to receive notice of the administrator’s appointment, to submit claims to the administrator, and to vote on any proposals made by the administrator, as per paragraph 3(8) of Schedule B1 of the Insolvency Act 1986.

• Reporting Requirements. The administrator has a duty to provide regular reports to the company, its creditors, and the court, detailing the progress of the administration and the administrator’s proposals and actions, as per paragraph 3(6) of Schedule B1 of the Insolvency Act 1986.

• Exit from Administration. The administration can end by achieving the administrator’s objective, such as rescuing the company, completing a business sale, or by filing a notice of discontinuance or termination with the court, as per paragraph 3(9) of Schedule B1 of the Insolvency Act 1986.

It’s important to note that the Insolvency Act 1986 and Schedule B1 contain detailed provisions and requirements for company administration, and the specific process and implications may vary depending on the circumstances and facts of each case.

The benefits of and effects of a company administration to the company and other interested parties include:

• Rescue Opportunity. Company administration provides the company with a chance to be rescued and continue as a going concern, which may result in a better outcome for creditors compared to immediate liquidation.

• Moratorium Protection. The moratorium imposed during the company administration provides the company with a temporary shield from legal actions by creditors, allowing it to focus on restructuring its affairs without the immediate pressure of creditor claims.

• Maximising asset value. The administrator’s duty to maximise the value of the company’s assets may result in a higher return for creditors compared to a fire sale which can happen in a liquidation process.

• Creditor involvement. Creditors have the opportunity to vote on the company administrator’s proposals and have a say in the outcome of the administration, giving them a level of control over the process.

• Fair treatment. Company administration aims to treat all creditors fairly and equitably, as the administrator must act in the best interests of all creditors as a whole.

Overall, company administration can provide a lifeline to financially distressed companies, allowing them to restructure and potentially continue their operations, while also protecting the interests of creditors.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration. We can help you too. Or call Tim Francis or James Roberts direct today – and they can help

The company administration procedure in England is primarily governed by the Insolvency Act 1986, as amended by subsequent legislation. The relevant provisions related to company administration can be found in Schedule B1 of the Insolvency Act 1986, which sets out the legal framework for administration.

The Insolvency Act 1986 provides the main legal basis for the initiation, conduct, and completion of the company administration process, including the appointment and powers of the company administrator, the moratorium period, the administrator’s duties and responsibilities, the voting requirements for approval of proposals, and the distribution of funds to creditors.

Set out below are the main sections of Schedule B1 of the Insolvency Act 1986 dealing with company administration, along with a brief summary of each section. Our expert team is able to advise on every aspect of the company administration process:

Paragraphs 10 to 42 Schedule B1 of the Insolvency Act 1986

Appointment and effect of administration. These paragraphs outline the procedure for the appointment of an administrator, the legal effect of administration.

Paragraphs 41 and 42 Schedule B1 of the Insolvency Act 1986

The moratorium. These paragraphs explain the automatic moratorium that comes into effect upon the appointment of an administrator, which provides the company with a temporary shield from legal actions by creditors.

Paragraphs 76 to 80 Schedule B1 of the Insolvency Act 1986

Duration and extension of the moratorium.  These paragraphs cover the duration of the moratorium and the conditions under which it may be extended or terminated.

Paragraphs 67 – 68 Schedule B1 of the Insolvency Act 1986

Duty of the administrator to manage the affairs, business, and property of the company. This section sets out the administrator’s duty to manage the company’s affairs, business, and property in the interests of the company’s creditors as a whole.

Paragraph 3 (2) Schedule B1 of the Insolvency Act 1986

Duty of the company administrator to act in the interests of the company’s creditors as a whole.  This paragraph emphasises the administrator’s primary duty to act in the best interests of the company’s creditors as a whole throughout the administration process.

Paragraph 49 Schedule B1 of the Insolvency Act 1986

Company administrator’s proposals for achieving the purpose of administration. This paragraph outlines the requirement for the administrator to prepare and obtain approval for proposals on how to achieve the purpose of the company administration, which may include restructuring or selling the company.

Paragraph 50-57 Schedule B1 of the Insolvency Act 1986

Consent or approval of creditors.  These paragraphs explain the procedures for obtaining the consent or approval of creditors for the administrator’s proposals, including the process for voting on proposals and the legal effect of such consent or approval.

Paragraph 65-66 Schedule B1 of the Insolvency Act 1986

Distribution of property to secured or preferential creditors.  These paragraphs set out the order of priority for distribution of funds to secured or preferential creditors after the administrator’s fees and expenses have been paid.

Paragraph 65 – 66 Schedule B1 of the Insolvency Act 1986

Distribution of property to unsecured creditors.  These paragraphs outline the procedure for the distribution of funds to unsecured creditors after the payment of secured or preferential creditors.

Paragraph 76-80 Part II, Schedule B1 of the Insolvency Act 1986

Termination of the company administration. These paragraphs cover the circumstances under which the administration may be terminated, including by court order or by the administrator’s application.

Paragraph 98 Schedule B1 of the Insolvency Act 1986

Release of the company administrator. This paragraph explains the procedure for the release of the administrator from office and the consequences thereof.

These are the main sections of Schedule B1 of the Insolvency Act 1986 that deal with the administration procedure in England.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration including detailed knowledge and understanding of key legislation.

Or call Tim Francis or James Roberts direct today – and they are here to take your call

Some of the key benefits of the company administration procedure are set out below.

1. Rescue and restructuring options. Company administration provides a company in financial distress with an opportunity to rescue and restructure its operations, rather than being forced into formal liquidation. This may allow the company to continue trading and potentially regain profitability, preserving jobs and business relationships.
2. Moratorium protection. Upon the appointment of a company administrator, an automatic moratorium comes into effect, which provides the company with protection from legal actions by creditors. This can provide breathing space for the company to stabilise its finances and negotiate with creditors without the threat of enforcement action.
3. Protection of company assets. In the company administration process, the administrator takes control of the company’s affairs, business, and property, with a duty to manage them in the interests of the company’s creditors as a whole. This can help protect the company’s assets from being dissipated or misused during the administration process.
4. Flexibility and speed. Company administration is a flexible process that can be tailored to the specific needs of the company and its stakeholders. It can be initiated relatively quickly, and the company administrator has wide powers to take actions to achieve the purpose of company administration, which may include restructuring, refinancing, or selling the company.
5. Preservation of value. Company administration aims to maximise the value of the company’s assets for the benefit of creditors. The company administrator may take steps to preserve and enhance the value of the company’s business and assets, which may result in a better outcome for creditors compared to formal liquidation.
6. Control and expertise of the administrator. The company administrator is a licensed insolvency practitioner with specialised knowledge and experience in dealing with financially distressed companies. The administrator’s expertise and control over the company administration process can help ensure that the interests of all stakeholders, including the company, its creditors, and its employees, are considered and protected. At FWJ we have excellent relationships with a wider range of insolvency practitioners and can find the right fit for any company
7. Enhanced creditor protection. Company administration may provide additional protection to certain types of creditors, such as floating charge holders, who may have priority in the distribution of funds from the company’s assets.
8. Flexibility in proposals. The company administrator is required to prepare proposals on how to achieve the purpose of administration, which may include restructuring or selling the company. This allows for flexibility in developing proposals that can be approved by creditors and implemented to achieve the best possible outcome for all stakeholders.
9. Preservation of jobs. Unlike liquidation, which may result in the immediate cessation of business operations and loss of jobs, company administration may provide an opportunity for the company to continue trading and preserve jobs, thereby mitigating the impact on employees and their families.
10. Enhanced prospects for business survival. By providing a mechanism for rescuing and restructuring financially distressed companies, company administration may increase the prospects for the survival of the company as a going concern, which can benefit not only the company and its creditors, but also the broader economy and business community.

It’s important to note that the benefits of company administration may vary depending on the specific circumstances of each case. Our team has been advising businesses since 2002 and have experienced a huge range of distressed business situations. With that knowledge, we are able to help any sized business in any type of industry.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration and company rescue. We can help you too. Or call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway.

A “Notice of Intention to Appoint” is a formal notice that can be given by a company or its directors to indicate their intention to appoint an administrator under the company administration process as set out in the Insolvency Act 1986 in England. The process and requirements for a Notice of Intention to Appoint are as follows:

1. Notification by the Company’s Directors. The directors of the company must give notice to any person who they propose to appoint as an administrator, informing them of their intention to appoint.
2. Notice to the Company’s Registered Office. The company must file a Notice of Intention to Appoint at its registered office, which must be signed by one or more of the directors, and state the date and time of the notice.
3. Time Limit. The Notice of Intention to Appoint is valid for 10 business days from the date of filing at the registered office, during which time no other administration application can be made against the company.
4. Notice to Existing Charge Holders. The company must serve a copy of the Notice of Intention to Appoint on any existing charge holders, such as secured creditors, giving 5 business days’ notice within 10 days of filing the notice in court of filing the notice at the registered office.
5. Protection from Legal Actions. Once a Notice of Intention to Appoint is filed, an automatic moratorium comes into effect, providing the company with protection from most legal actions by creditors, such as debt recovery, for a period of 10 business days.
6. Appointment of Administrator. If a company administrator is not appointed within the 10 business day period, the Notice of Intention to Appoint will cease to have effect, and the automatic moratorium will come to an end. However, the company or its directors may still choose to proceed commence the process afresh.

The Notice of Intention to Appoint provides the company with a period of protection from creditor actions while the company and its directors consider the appointment of a company administrator and formulate a plan for the company’s financial situation. It is a preliminary step in the company administration process and is subject to strict timelines and requirements as set out in the Insolvency Act 1986 and subsequent amendments.

A qualifying charge holder, as defined under the paragraph 14 Schedule B1 of the Insolvency Act 1986 in England, refers to a person who holds a qualifying floating charge over a substantial / all of the company’s property or undertaking which are not subject to a fixed charge. The concept of a qualifying charge holder is relevant in the context of company administration as it affects the priority and treatment of secured creditors during the administration process.

Under the legislation, a qualifying charge holder has certain rights and privileges in relation to a company in administration, including:

• Priority of Repayment. A qualifying charge holder has priority over other unsecured creditors in the repayment of their debt from the proceeds of the company’s assets that are subject to the qualifying floating charge. This means that, in the event of a distribution of assets during the company administration process, the qualifying charge holder’s claim will be satisfied before those of unsecured creditors.

• Control over Assets. A qualifying charge holder may have the right to appoint an administrator or exercise control over the company’s assets, depending on the terms of the qualifying floating charge. This gives the qualifying charge holder a certain level of influence in the administration process, as they may have the ability to direct the actions of the administrator or take steps to protect their interests.

• Notice of Intention to Appoint. A company must serve a copy of the Notice of Intention to Appoint on any qualifying charge holder, along with other relevant parties, within 5 business days of filing the notice at the company’s registered office, as per the requirements under the Insolvency Act 1986.

It’s important to note that the rights and treatment of qualifying charge holders in company insolvency may be subject to the specific terms and conditions of the qualifying floating charge, as well as any court orders or directions that may be issued during the company administration process. The Insolvency Act 1986, along with subsequent amendments and case law, provide the legal framework for the treatment of qualifying charge holders in company administration in England.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration including QFCH’s. Call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

Under Schedule B1 of the Insolvency Act 1986 in England, the ability to appoint an administrator is granted to different parties, depending on the circumstances. The following entities have the ability to appoint an administrator:

1. The company itself. The board of directors of a company can resolve to appoint a company administrator. This can be done through a board resolution or by passing a resolution in accordance with the company’s articles of association. The appointment of an administrator by the company itself is commonly referred to as “out of court” appointment.
2. The company’s directors. The directors of a company can also appoint a company administrator if they believe that the company is or is likely to become insolvent, and the appointment of an administrator is in the best interests of the company and its creditors. This appointment is known as a “directors’ appointment” and must be made in writing.
3. A qualifying floating charge holder. A qualifying floating charge holder, which is typically a secured creditor who holds a floating charge over the company’s assets, has the ability to appoint an administrator. This right is typically granted through a security agreement or debenture, and the floating charge must be “qualifying” under the Insolvency Act 1986 to have this power.
4. The court. The court also has the power to appoint an administrator upon the application of the company, its directors, a creditor, or any other interested party. The court can also make an administration order if it is satisfied that it is just and equitable to do so, or if it is in the best interests of the company and its creditors.

It’s important to note that the appointment of an administrator must be done in accordance with the requirements and procedures set out in the Insolvency Act 1986, as well as any relevant contractual agreements or court orders. It’s advisable to seek professional advice from a qualified insolvency practitioner or legal professional to ensure that the appointment of a company administrator is carried out properly and in compliance with the applicable laws and regulations.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration including the vital aspect of administration appointments. Call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

In England & Wales, a company administration is a formal insolvency process that is governed by Schedule B1 the Insolvency Act 1986, as well as other relevant legislation and regulations. The company administration procedure typically involves the following steps:

• Appointment of an Administrator. The company or its directors, a qualifying floating charge holder (e.g., a secured creditor with a floating charge created before the administration), or the court may appoint an insolvency practitioner as the administrator. The company administrator must be a licensed insolvency practitioner who is qualified to act as an administrator under the Insolvency Act 1986.

• Statement of Affairs. The company’s directors are required to provide the administrator with a statement of the company’s affairs, which includes details of its assets, liabilities, and creditors.

• Moratorium. Once appointed, the administrator may impose a moratorium, which is a legal stay on most creditor actions against the company. This provides the company with breathing space and protection from creditor enforcement while the company administrator assesses the company’s financial situation and develops a strategy for the administration.

• Assessing the Company’s Viability. The company administrator’s primary duty is to act in the best interests of the company’s creditors as a whole. The administrator will assess the company’s financial position, business operations, and viability, and consider options for achieving the statutory objectives of company administration, which include rescuing the company as a going concern, achieving a better result for creditors than liquidation, or realising the company’s assets for distribution to creditors.

• Developing and Implementing a Strategy. The administrator will develop a strategy for the company administration, which may include selling the company’s assets or business, restructuring the company’s operations, negotiating with creditors, and/or proposing a Company Voluntary Arrangement (CVA) or other arrangement to creditors for approval.

• Meetings and Reports. The administrator is required to hold meetings with creditors and/or shareholders to update them on the progress of the company administration and seek their input and approval on key decisions. The administrator must also prepare reports on the progress and proposals of the company administration, which are filed with the court, Companies House, and sent to creditors and other relevant parties.

• Distribution to Creditors. If the administrator is able to realise the company’s assets or business, the proceeds will be used to pay the costs and expenses of the administration, secured creditors with valid claims, and any remaining funds will be distributed to unsecured creditors in accordance with the statutory order of priority set out in the Insolvency Act 1986.

• Termination of the company administration. The company administration may be terminated by the administrator once the statutory objectives have been achieved, or by the court upon application by the administrator, the company, or a creditor. The company may exit administration by returning to solvency, entering into a CVA or other arrangement, or entering into liquidation.

It’s important to note that the administration process can be complex and may involve various legal and procedural requirements. The specific steps and procedures may vary depending on the circumstances of the individual case, and it is advisable to seek our expert help in order to ensure full compliance with the relevant legislative provisions and regulations.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration. We can help you too. Or call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

The duration of a company’s administration can vary depending on various factors, including

• the complexity of the company’s financial situation,
• the goals of the administration, and
• the progress made in achieving those goals.

In general, the company administration process is intended to be a temporary measure to provide a company with breathing space to stabilise its affairs and develop a plan for its future.

• According to Schedule B1 of the Insolvency Act 1986, the maximum initial period of administration is 12 months from the date of the administrator’s appointment, unless extended by court order or with the consent of the creditors.
• During this initial period, the administrator is required to work towards achieving the purpose of the company administration, which is typically to rescue the company as a going concern, achieve a better result for the company’s creditors than would be likely if the company were wound up, or realise the company’s assets to make a distribution to creditors.

If the administrator is unable to achieve the purpose of the company administration within the initial period, the administration may come to an end, and the company may be placed into liquidation or another insolvency procedure, unless the administration is extended by court order or with the consent of the creditors.

It’s important to note that the actual duration of a company’s administration can vary widely depending on the specific circumstances of each case. In some cases, administrations can be completed within a few months, while in more complex cases, it may take longer to achieve the goals of the company administration. It is always advisable to seek professional advice from a qualified insolvency practitioner or law firm to understand the timeline and process of a specific administration case.

FWJ are that expert law firm – and we have excellent contacts with a wide range of Insolvency Practitioner – we can help take the guess work and stress out of the situation you are in.

According to the Insolvency Act 1986 in England, the maximum initial period of administration is 12 months, as stated in paragraph 68(1) of Schedule B1 of the Act. This is outlined in the following section:

“68(1) The administrator of a company must perform his functions as quickly and efficiently as is reasonably practicable, but his appointment as administrator (and any extension of that appointment) must not continue for longer than one year beginning with the day after the date on which his appointment (or last appointment) takes effect, subject to paragraph 83 (extension of administration period).”

However, it is also important to note that the actual duration of a company’s administration can vary depending on various factors, such as the complexity of the company’s financial situation, the goals of the administration, and the progress made in achieving those goals. The administration period can be extended beyond the initial 12 months with the consent of the creditors or by court order, as mentioned in paragraph 83 of Schedule B1 of the Insolvency Act 1986.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration including duration and extension of administrations. We can help you too. Or call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

This is a question we are commonly asked and have dealt with many times over the years.

When a company goes into administration in England, the employment status and rights of the staff and employees are protected by various laws, including the Insolvency Act 1986, as well as the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE).

Under the Insolvency Act 1986, the appointment of an administrator does not automatically terminate the contracts of employment of the company’s staff and employees. This means that the contracts of employment of the staff and employees remain in force, and they continue to be employed by the company even after the appointment of an administrator.

Additionally, TUPE may also apply in the event of a company’s administration.

• TUPE is a separate set of regulations that protect the employment rights and obligations of employees when a business or undertaking is transferred or undergoes a change of ownership.
• If the administrator sells or transfers the business or assets of the company during the administration process, TUPE may apply, and the employment rights of the staff and employees may be preserved.

Under TUPE, employees who are transferred to a new employer as a result of a business transfer or asset sale during the company administration process are entitled to have their employment contracts and terms and conditions preserved, including their accrued rights, length of service, and any collective agreements. The new employer, whether it be the company administrator or a third-party buyer, must also comply with certain obligations related to employee consultations, information provision, and potential dismissals.

It’s important to note that the specific circumstances and implications for staff and employees during a company’s administration can vary depending on the nature of the business, the details of the administration process, and the application of relevant laws and regulations. Employees and staff affected by a company’s administration should seek advice from a qualified legal professional or consult with a trade union or employee representative for specific guidance and assistance.

Employees of a company that enters into administration in England & Wales are protected by various rights under the Insolvency Act 1986 and other relevant legislation. Some of the key rights of employees during a company administration include:

• Continuity of Employment. The employees’ contracts of employment generally continue during the company administration process, unless the administrator terminates the contracts with the consent of the employees or with the approval of the court.

• Protection of Wages. The administrator is required to pay employees their wages and other contractual entitlements for work carried out during the administration period as an expense of the company administration, subject to certain limits and priorities set out in the Insolvency Act 1986.

• Redundancy Payments. If employees are made redundant as a result of the administration, they may be entitled to redundancy payments under the Employment Rights Act 1996, subject to certain qualifying criteria and statutory limits.

• Consultation Rights. The company administrator is required to consult employee representatives (e.g., trade unions or elected employee representatives) about any proposed dismissals or changes to employment terms and conditions that may be proposed during the administration, in accordance with the Trade Union and Labour Relations (Consolidation) Act 1992 and other relevant legislation.

• Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). If the business of the company in administration is sold or transferred, employees may be protected by TUPE, which provides for the automatic transfer of their employment contracts to the new owner, along with their rights and entitlements, subject to certain conditions and safeguards.

• Priority of Claims. Employees’ claims for wages, holiday pay, and certain other employment-related claims are given priority in the distribution of assets during the administration process, as set out in the Insolvency Act 1986, ahead of most other unsecured claims.

• Right to Claim Unpaid Wages. Employees who are owed wages and other entitlements by the company in administration have the right to make a claim to the National Insurance Fund for unpaid wages and certain other claims, as provided for under the Insolvency Act 1986.

• Access to Information. Employees have the right to be kept informed about the progress of the administration, including the proposals of the administrator and any developments that may affect their employment rights.

TUPE, which stands for Transfer of Undertakings (Protection of Employment) Regulations, is a piece of UK legislation that protects employees’ rights when the business or undertaking in which they are employed is transferred to a new employer, such as in a company administration process. When a company goes into administration, and the administrator takes control of the company’s operations, TUPE may apply, and the administrator must comply with its provisions.

Under TUPE, the employment contracts of affected employees are automatically transferred to the new employer, the administrator in this case, on their existing terms and conditions of employment. The key legislation provisions related to TUPE and administration are as follows:

• Transfer of Employees. Regulation 4 of TUPE provides that when a business or undertaking is transferred to a new employer, employees assigned to that business or undertaking automatically become employees of the new employer. This means that their employment contracts, rights, and liabilities are transferred to the new employer, including their terms and conditions of employment, continuity of employment, and any associated rights, such as accrued holiday pay, sick pay, and pension rights.

• Preservation of Employee Rights. Regulation 4 of TUPE also stipulates that the employees transferred to the new employer, the administrator in this case, must be treated no less favourably than before the transfer in relation to their terms and conditions of employment, unless certain specific and limited exceptions apply. This includes maintaining their existing pay, working hours, job roles, and other contractual benefits.

• Consultation Requirements. Regulation 13 of TUPE requires the outgoing employer, the administrator in this case, to inform and consult employee representatives about the transfer, as well as any measures that may be taken in relation to the employees as a result of the transfer. The administrator must also provide information about the transfer to the employees themselves in writing, including details of the transfer, the reasons for it, and any measures that may be taken.

• Employee Rights in Insolvency Situations. Regulation 8 of TUPE provides additional protections for employees in insolvency situations, such as company administration. If the company is insolvent and the administrator envisages that measures will be taken in relation to employees, the administrator must consult employee representatives as soon as reasonably practicable before taking those measures.

• Redundancy Payments. Regulation 7 of TUPE also provides that if the transfer of the business or undertaking results in the employees being made redundant, the employees may be entitled to redundancy payments in accordance with the Employment Rights Act 1996, and the administrator may be liable for these payments, subject to certain limitations and qualifications.

It’s important to note that the application of TUPE in the context of company administration can be complex and may involve various legal and procedural requirements. The administrator must comply with TUPE provisions and ensure that the rights of the affected employees are preserved and protected throughout the administration process.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration. We can help you too. Or call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

A pre pack administration, (also known as a pre-packaged administration), is a specific type of administration process in England & Wales where the sale of a company’s business or assets is agreed upon prior to the appointment of an administrator, and the sale is then completed shortly after the administrator’s appointment. Used correctly a pre pack sale can help a company.

The main legislative provisions governing pre-pack administrations in England are contained in Statement of Insolvency Practice 16 (SIP 16), which is a code of practice issued by the governments Insolvency Service.

• Under a pre pack administration, the sale of the company’s business or assets is negotiated and agreed upon prior to the appointment of the administrator. Once the administrator is appointed, they will then execute the pre-agreed sale as part of the administration process, usually completing the sale within a short timeframe.

• SIP 16 sets out various requirements and principles for pre pack administrations, including the need for the administrator to provide a statement to creditors explaining the rationale and justification for the pre-pack sale, and to consider and report on whether the pre pack sale is likely to result in a better outcome for the company’s creditors than other alternatives.

Pre pack administrations can be controversial, as they may involve the sale of a company’s assets at a lower value than would be achieved in an open market sale, which can result in losses for creditors, particularly unsecured creditors. However, pre pack administrations can also be seen as a way to rescue a viable part of a struggling company, preserve jobs, and maximise the return for creditors in certain circumstances.

It’s important to note however, that the use of pre-pack administrations is subject to regulatory oversight and compliance with SIP 16, and professional advice from qualified insolvency practitioners should be sought when considering or dealing with a pre pack administration.

If a business is sold to a connected party under a pre pack such as a director of the insolvency company, that party is also required to obtain an independent evaluation report approving the sale.

A pre pack administration is a specific type of administration process in England where the sale of a company’s business or assets is agreed upon prior to the appointment of a company administrator, and the sale is then completed shortly after the administrator’s appointment. The main differences between a pre-pack administration and a normal company administration are:

• Sale & Purchase agreement. In a pre pack administration, the sale of the company’s business or assets is negotiated and agreed upon before the appointment of the administrator, whereas in a normal company administration, the administrator has the authority to sell the assets after their appointment.

• Timing. A pre pack administration is completed quickly, usually within a short timeframe after the appointment of the administrator, whereas a normal company administration may take longer to complete, depending on the circumstances and complexity of the company’s affairs.

• Marketing and open market sale. In a pre pack administration, there may be limited marketing or exposure of the company’s assets to the open market, as the sale is pre-agreed and executed quickly, whereas in a normal company administration, the administrator is required to market the assets for sale in the open market to obtain the best possible price.

• Transparency and creditor involvement. A pre pack administration may be perceived as less transparent, as the sale is negotiated and agreed upon prior to the appointment of the company administrator, and there may be limited creditor involvement or input in the sale process. In a normal company administration, the administrator is required to act in the best interests of the creditors as a whole, and their actions are subject to more scrutiny, reporting, and creditor involvement.

• Compliance with SIP 16. Pre pack administrations are subject to compliance with Statement of Insolvency Practice 16 (SIP 16), which sets out specific requirements and principles for pre pack administrations, including the need for the administrator to provide a statement to creditors explaining the rationale and justification for the pre-pack sale. Normal company administrations are not subject to the same level of regulatory requirements specific to pre packs.

It’s important to note that pre-pack administrations are subject to regulatory oversight and compliance with SIP 16, and professional advice from qualified insolvency practitioners should be sought when considering or dealing with a pre-pack administration.

1. What is a pre pack?

In a pre packaged administration sale, or pre-pack, the proposed insolvency practitioner assesses the business and assets of a struggling company before his appointment. Leading up to the appointment date, the insolvency practitioner will then undertake a short, and private, marketing process, and will have already identified a potential purchaser before the administration process begins. An offer received from this purchaser is usually concluded at the same time as, or immediately following, appointment of a company administrator.

Pre pack administrations are particularly valuable tool for insolvency practitioners, allowing for the rescue of value and jobs in a distressed business, which may otherwise be lost due to the natural delays of a drawn-out marketing process, or the broader market impact of company’s public entry into an insolvency process.

Often, the best potential purchaser for a struggling company will be its director(s). A pre-pack sale to former directors can preserve valuable relationships and experience between the existing management team and their employees, and frequently those best placed to continue utilising a company’s business and assets are those most familiar with the business itself.

2. Why are pre packs administrations controversial?

Pre-packs to connected parties, such as former directors, are sometimes unpopular with creditors. Creditors may perceive the sale process to be opaque, as it will be concluded in short order, and may be frustrated where they are left to share in a proportional dividend of the sale price. This is particularly the case where the company’s former directors trade on in their new company, generating further profits with the insolvent entity’s former business and assets.

3. How does the current regime work?

This controversy around pre packs has led to the requirement for insolvency practitioners to provide a statement to creditors, setting out how the decision to opt for a pre pack administration was reached and why any foregone alternatives were rejected. An independent body, the Pre-Pack Pool, was also established to provide quick, opt-in, short-term assessments of connected party pre-packs to ensure they have been entered into in due consideration of creditor interests.

4. How have things changed more recently?

The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, which applies to all companies which entered administration on or after 30 April 2021, brought into effect a set of new rules which we summarise as follows:

• An administrator will not be able to sell, dispose or hire out all or a substantial part of a company’s property, to a ‘connected person’,  in the first 8 weeks of a company’s administration, without receiving either approval from the company’s creditors, or a qualifying report from an independent evaluator;
  • A connected person is, for the purposes of the Regulations, broader than a director of the insolvent company. This could include family or the business associates of an appointed director, certain types of secured creditors of the insolvent entity, shadow directors or other members of the entity’s management team (other than employees), and connected companies or members of a corporate group.

• Creditor approval can be sought by including details of the proposed connected party pre-pack sale in the administrator’s proposals document delivered to Companies House following their appointment, and then by seeking a decision from creditors on the sale.
  • Creditors can either approve the sale outright or submit modifications for the administrator’s consideration;

• The qualifying report in accordance with Chapter 3 of the Administration (Restriction on Disposal to connected Person Regulations) 2021 must be obtained by the proposed connected purchaser, and must be provided by an evaluator, being a person with sufficient knowledge and expertise to opine on the merits of the sale;
  • The report must contain, among other things:
    • a statement that the evaluator is either satisfied that the sale, and consideration, or funds being provided for the sale are reasonable in the circumstances (or otherwise);
    • the principal reasons that the evaluator believes this to be the case;
    • confirmation of the evaluator’s professional indemnity insurance;
    • a statement of the evaluator’s knowledge and experience relevant to their being qualified to provide the report;

• The evaluator must have sufficient insurance cover to provide the report, and must be independent from administrator, companies connected with the administrator, and the proposed connected party purchaser;

• An administrator must send a copy of the qualifying report to Companies House when delivering its proposals to creditors;
• The connected party is permitted to obtain more than one report (and so some amount of window-shopping may be possible), but if a new evaluator becomes aware that a previous report has already been obtained, they are obliged to detail any steps taken to obtain such a report and, if it has not been provided to them, why this was the case.
• The administrator is not bound by the decision in the qualifying report. However, if they proceed with a pre-pack sale after receiving an opinion from an evaluator that the case for the sale is not made out, they will need to explain this to the company’s creditors.

The FWJ view on these changes

As The Administration (Restriction on Disposal to connected Persons) 2021 Regulations are evidently something of a developing issue, it will be necessary for insolvency practitioners and potential connected-party purchasers alike to keep an eye on the developing landscape of qualifying reports.

It does not seem likely that creditors will often be asked to approve a connected-party pre-pack. Speed and secrecy, arguably the greatest benefits of the process, would be lost by providing details of the planned sale in an administrators’ proposals.

In practice, it is likely that pre-packs will remain a useful tool for rescuing value in insolvent companies. Naturally, insolvency practitioners are experienced professionals with a great deal at stake in evaluating a potential sale. It is simply not the case that pre-packs are often concluded without justification and, therefore, one would think that achieving a positive report will not be too great of a hurdle.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company pre pack administrations. We can help you too. Or call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

Some of the main differences between a Company Voluntary Arrangement (CVA) and a Company Administration are set out below:

• Purpose. A CVA is a formal arrangement between the company and its creditors to repay debts over a specified period, while the company continues to trade. An Administration, on the other hand, aims to achieve one of the statutory purposes of administration, such as rescuing the company as a going concern, achieving a better result for creditors than liquidation, or realising property to make a distribution to secured or preferential creditors (Insolvency Act 1986, Schedule B1, Paragraphs 3-14).

• Commencement of the process. A CVA is a voluntary arrangement proposed by the company’s directors or shareholders, whereas an Administration is typically initiated by a court order or by the appointment of an administrator by a qualifying floating chargeholder, the company, or its directors (Insolvency Act 1986, Schedule A1, Paragraphs 11-14).

• Control. In a CVA, the company’s directors typically retain control of the company and continue to manage its affairs, subject to the terms of the CVA proposal. In an Administration, an administrator is appointed to take control of the company’s affairs, with powers and duties defined by the Insolvency Act and the court (Insolvency Act 1986, Schedule B1, Paragraphs 3-66).

• Moratorium. A Company Voluntary Arrangement does not impose an automatic moratorium on legal actions or enforcement actions by creditors, whereas a company Administration provides for a statutory moratorium that prohibits most legal actions against the company without the consent of the administrator or the court (Insolvency Act 1986, Schedule B1, Paragraphs 43-49).

• Duration. A CVA typically has a fixed term, usually ranging from a few months to several years, as approved by the creditors. A company Administration has a maximum initial period of 12 months, which can be extended by the consent of the creditors or by court order (Insolvency Act 1986, Schedule B1, Paragraphs 68-83).

• Voting Requirements. In a CVA, the proposal must be approved by a majority in value of the company’s unsecured creditors, and, if approved, it binds all creditors, including those who voted against it. In a company administration, the administrator must seek the consent of the creditors or the court for certain actions, such as selling property, and is required to act in the interests of all creditors as a whole (Insolvency Act 1986, Schedule B1, Paragraphs 51-57).

• Creditor Rights. In a CVA, creditors are bound by the terms of the arrangement once approved, and their rights are limited to the terms of the CVA proposal. In an Administration, creditors have the right to claim in the administration for their debts and may be entitled to vote on certain matters, such as the administrator’s proposals for achieving the statutory purpose of a company administration (Insolvency Act 1986, Schedule B1, Paragraphs 56-57).

• Assets and Liabilities. In a Company Voluntary Arrangement, the company’s assets and liabilities remain with the company, and the company continues to trade and operate, subject to the terms of the CVA proposal. In an Administration, the administrator takes control of the company’s assets, and the company’s liabilities during the administration period are subject to statutory priorities and distributions, as set out in the Insolvency Act 1986, Schedule B1, Paragraphs 71-74.

• Termination. A CVA terminates automatically once the terms of the arrangement have been fulfilled or if it is terminated by the creditors or the court.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration and CVA’s. We can help you too. Or call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

Company administration and winding up are both insolvency processes under the Insolvency Act 1986 in England, but they have several key differences, including:

• Objective. The main objective of company administration is to achieve a rescue or restructuring of the company, whereas the main objective of winding up is to liquidate the company’s assets and distribute the proceeds to creditors.

• Process. Company administration involves the appointment of an administrator who takes control of the company, manages its affairs, and aims to achieve a viable outcome for the company and its creditors. Winding up involves the appointment of a liquidator who realises the company’s assets and distributes the proceeds to creditors.

• Continuity of company. Administration aims to keep the company as a going concern, with the possibility of the company being returned to its directors or shareholders after the company administration process, or through a sale of the business or assets as a going concern. Winding up results in the termination of the company’s existence, with the company being dissolved and its assets sold off to pay creditors.

• Timing. Company administration is typically used as a temporary measure, with a maximum initial period of one year, and can be extended with creditor approval. Winding up is the final process that results in the liquidation & dissolution of the company.

• Decision-making. In a company administration, the administrator takes control of the company and makes key decisions, subject to certain limitations and oversight. In winding up, the liquidator takes control of the company’s assets and makes decisions related to their realisation and distribution.

• Legal effect. Company administration results in a moratorium, which provides the company with protection from creditor enforcement actions during the administration period. Winding up does not provide the same moratorium, and creditor enforcement actions can continue.

• Creditor hierarchy. In a company administration, there is a statutory hierarchy of creditors’ claims in the distribution of assets, which includes the administrator’s fees and expenses, preferential debts, and floating charge holders. In a winding up, the order of distribution is different, with preferential debts and floating charge holders ranking differently.

• Potential for company rescue. Company administration is generally considered as a more flexible process that may provide opportunities for the company’s rescue or restructuring, whereas winding up is typically used as a terminal process for liquidating a company’s assets.

It’s important to note that administration and winding up are complex legal processes and it is vital to speak to our highly experienced team before deciding on any type of insolvency or company rescue process.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration and winding up procedures. We can help you too. Or call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

When a company enters into administration in England & Wales, it is placed under the control of an insolvency practitioner who is appointed as the administrator. The company administration process is governed by the Insolvency Act 1986 and subsequent amendments, as well as other relevant legislation. The key role and duties of the insolvency administrator, as set out in the legislation, include:

• Duty to Act in the Best Interests of Creditors and the Company. The administrator has a duty to act in the best interests of the company’s creditors as a whole, while also taking into consideration the interests of the company and its stakeholders.

• Power to Manage and Dispose of Company’s Property. The administrator has the power to manage and dispose of the company’s property, including its assets, business, and affairs, with the objective of achieving the purpose of the administration, which is typically to rescue the company as a going concern, achieve a better result for creditors than liquidation, or realize assets to repay creditors.

• Moratorium on Legal Actions. Upon the appointment of an administrator, a moratorium on most legal actions against the company is automatically triggered, providing the company with a breathing space from creditor actions, such as debt recovery, while the administrator assesses the company’s financial situation and formulates a plan.

• Duty to Formulate and Implement a Proposal. The administrator must formulate a proposal, which is a plan for achieving the purpose of the company administration, and seek approval from the company’s creditors, or the court, as appropriate. The proposal may include options such as restructuring, refinancing, selling the business or assets, or entering into a Company Voluntary Arrangement (CVA).

• Duty to Report to Creditors and Court. The company administrator must provide regular reports to the company’s creditors and the court on the progress of the company administration, including financial statements, the outcome of the proposal, and any material changes to the administration plan.

• Duty to Consider Employee Interests. The company administrator has a duty to consider the interests of the company’s employees, including their contracts of employment, and may take steps to safeguard their employment rights and interests, in accordance with the relevant legislation, such as the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE), which protects employees’ rights in the event of a business transfer or sale.

• Duty to Realise Assets for Creditors. The administrator has a duty to realise the company’s assets and distribute the proceeds to the company’s creditors in accordance with the statutory order of priority, unless a different arrangement is approved by the creditors or the court.

• Duty to Act with Reasonable Care and Skill. The company administrator must exercise reasonable care and skill in managing the affairs of the company, including making informed decisions, maintaining proper books and records, and acting in a transparent and accountable manner.

• Duty to Consider Alternative Courses of Action. The company administrator must consider and, if appropriate, take alternative courses of action that are likely to achieve a better result for the company’s creditors than would be achieved by winding up the company.

• Duty to Act Independently and Impartially. The administrator must act independently and impartially, avoiding conflicts of interest and prioritizing the interests of the company’s creditors as a whole over other interests.

Overall, the company administration procedure is aimed at providing a framework for the administrator to manage the company’s affairs, formulate and implement a proposal, and maximise the returns for creditors, while also considering the interests of the company and its stakeholders, and complying with the relevant legislative provisions and duties.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration including the duties and responsibilities of company administrators. Or call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

There are several exit routes out of company administration in England, which are governed by key legislative provisions. These exit routes are designed to facilitate the resolution of the company’s financial difficulties and achieve the best outcome for its stakeholders. Some of the common exit routes out of company administration include:

• Company Voluntary Arrangement (CVA). A CVA is a legally binding agreement between the company and its creditors, which is proposed by the administrator and approved by the creditors. It sets out a plan for the company to repay its debts over time and continue trading under the supervision of the administrator. The key legislative provision related to CVA is Part 1, Schedule A1 of the Insolvency Act 1986, which outlines the requirements and procedures for CVA.

• Sale of the Business/Assets. The administrator may sell the company’s business or assets as a going concern to a third-party buyer, either through a private sale or a formal insolvency process, such as a pre-pack administration sale. The key legislative provisions related to the sale of business/assets in administration include Part 3, Schedule B1 of the Insolvency Act 1986, which sets out the powers and duties of the administrator in relation to the sale of assets.

• Exit by Deemed Consent. The administrator may propose an exit from administration by deemed consent, which allows the company to exit administration without the need for a formal exit route, such as CVA or sale of business/assets. This is a quicker and more cost-effective option, which requires the consent of the creditors or the court. The key legislative provision related to exit by deemed consent is Rule 3.55 of the Insolvency (England and Wales) Rules 2016.

• Dissolution. If the company administrator concludes that the company has no assets or is no longer viable, they may apply for the company to be dissolved and struck off from the Companies House register. The key legislative provisions related to dissolution are set out in the Companies Act 2006, including sections 1000 to 1029, which outline the requirements and procedures for dissolution.

• Return to the Control of Directors. In some cases, the company may exit company administration and be returned to the control of its directors if the administrator concludes that the company’s financial position has improved and it can be managed by the directors without further supervision. This does not require any specific legislative provisions, but it is subject to the administrator’s discretion and the best interests of the company and its stakeholders.

It’s important to note that the choice of exit route from administration depends on various factors, such as the company’s financial situation, the goals and objectives of the company administration process, and the agreement of the creditors and other stakeholders. The company administrator will carefully consider the circumstances and choose the most appropriate exit route in accordance with the relevant legislative provisions and the best interests of the company and its stakeholders.

When a company is “brought out of administration”, it means that the company has successfully exited the administration process and is no longer under the control of an administrator. The company’s financial difficulties have been resolved or its assets have been sold, and it is returned to the control of its directors or other parties, depending on the exit route chosen. Bringing a company out of administration signifies that the company administration procedure has been completed and the company is now able to resume its normal business operations or continue under a new ownership structure, if applicable.

The exit from company administration can be achieved through various means, such as

• the approval of a Company Voluntary Arrangement (CVA) by the creditors,
• the sale of the company’s business or assets,
• company dissolution, or
• return to the control of directors, as determined by the administrator and in accordance with the relevant legislative provisions and the best interests of the company and its stakeholders.

It’s important to note that the exit from company administration does not necessarily mean that all the company’s financial difficulties have been fully resolved, but rather that a plan has been put in place to address the outstanding issues and the company has been released from the administration process. The company will need to continue to manage its financial affairs and fulfil its obligations to creditors and stakeholders in accordance with the terms of the exit route chosen and any ongoing arrangements, such as a CVA or sale agreement, as applicable.

During and after the administration process, a company in England may have several options depending on its circumstances. Some of the main options include:

• Business Continuation. If the company’s financial position and prospects are deemed viable, the administrator may choose to continue trading the business during the administration process with a view to achieving a better outcome for creditors.

• Sale of Business/Assets. The administrator may seek to sell all or part of the company’s business or assets to a third party as a going concern or in separate parts. This can be done to generate funds to repay creditors and maximise the return to stakeholders.

• Company Voluntary Arrangement (CVA). The company may propose a CVA to its creditors during the administration process or after it has exited administration. A CVA is a formal agreement between the company and its creditors to repay debts over a period of time, often with reduced or restructured payments.

• Company Liquidation. If the company is not viable, the company administrator may recommend or the creditors may vote for the company be placed in to formal liquidation. This involves the orderly winding-up of the company’s affairs and the distribution of its assets to creditors in accordance with the statutory order of priority.

• Company Dissolution. If the company has no assets or liabilities, the administrator may apply for the company to be dissolved or struck off the Companies Register.

• Exit from Company Administration. If the company’s administration objectives are achieved, the administrator may apply to the court for an order to bring the company out of administration. This allows the company to exit the administration process and resume normal trading.

It’s important to note that the options available to a company during and after administration can vary depending on the specific circumstances of the case, and the decision on the most appropriate course of action will be made by the administrator and/or the creditors based on the best interests of the company’s creditors and stakeholders. Expert Legal and financial advice should be sought to understand the implications, requirements, and procedures associated with each option.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration, including how to exit administration. We can help. Or call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

The priority of payments from the assets of a company in administration in England is governed by the Insolvency Act 1986, as amended. The legislation sets out the order of priority for payments to various classes of creditors, including secured and unsecured creditors, as follows:

• Expenses of the Administration. The costs and expenses of the company administration process, including the remuneration of the administrator and any legal or professional fees incurred in administering the company’s affairs during the administration, are given the highest priority and are paid first from the company’s assets.

• Secured Creditors. Secured creditors, including qualifying charge holders, who have a valid and enforceable security interest over the company’s assets, are entitled to be paid out of the proceeds of the realisation of their security interest in accordance with the terms of their security agreement. This includes the repayment of the principal amount of their debt, along with any interest or costs that may be due.

• Preferential Creditors. Certain preferential creditors, as defined by the Insolvency Act 1986, such as an element of employees’ wages, salaries, and pension contributions, are given priority after the expenses of the administration and secured creditors. These preferential creditors are entitled to be paid in priority to unsecured creditors, but only up to certain statutory limits and subject to certain conditions.

• Floating Charge Holders. Floating charge holders, who have a floating charge that has crystallised into a fixed charge over the company’s assets before the commencement of the administration, are treated as secured creditors and are entitled to be paid in accordance with the terms of their security agreement.

• Unsecured Creditors. Unsecured creditors, including trade creditors, suppliers, and other creditors who do not have a valid and enforceable security interest over the company’s assets, are generally the last to be paid from the remaining assets of the company after the above-mentioned priority payments have been made.

It’s important to note that the order of priority for payments may vary depending on the specific circumstances of the administration and any court orders or directions that may be issued during the process. As such, expert legal advise from our team is highly recommended if you have any questions about payments out of a company in Administration.

If a creditor is owed money by a company that is in administration, there are several steps they can take to seek payment, as outlined below:

• Lodge a proof of debt. Creditors should submit a formal proof of debt to the administrator, which is a formal claim that sets out the details of the debt owed, including the amount, nature of the debt, and supporting documentation. This is typically done using a prescribed form and within a specified timeframe set by the administrator.

• Participate in the creditors’ meetings. Creditors may have the right to participate in creditors’ meetings convened by the company administrator during the administration process. These meetings provide an opportunity for creditors to voice their concerns, ask questions, and receive updates on the administration progress.

• Monitor the administration process. Creditors should stay informed and monitor the administration process to ensure their interests are protected. This may involve reviewing reports and updates provided by the administrator, seeking legal advice, and actively engaging with the administrator to understand the status of the administration and the prospects for debt recovery.

• Consider legal action. If a creditor believes that their debt is not being properly addressed or their rights are being disregarded in the company administration process, they may consider taking legal action. This could involve seeking legal advice on challenging the administrator’s decisions or actions, or taking legal steps to enforce their rights as a creditor.

• Consider other options. Depending on the specific circumstances and the amount of the debt owed, a creditor may consider other options, such as negotiating with the administrator for a settlement, seeking a deed of company arrangement (DOCA) if proposed, or considering other forms of debt recovery or enforcement action outside of the administration process.

Our team regularly assists creditors on administration related issues. Contact us today for help.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration including help for creditors. Or call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

The costs associated with the company administration procedure in England can vary depending on the specific circumstances of the administration and the complexity of the case. The costs typically include professional fees, disbursements, and expenses incurred by the administrator in carrying out their duties.

Some of the main professional costs that may need to be covered during an administration process can include:

• Administrator’s Remuneration. The company administrator is entitled to remuneration for their services, which is usually based on an hourly rate or a fixed fee agreed upon by the company or the creditors.

• Legal and Accounting Fees. The administrator may engage legal or accounting professionals to provide advice and assistance during the administration process, and their fees would typically be included as part of the administration costs.

• Valuation and Realisation Costs. The administrator may need to engage professional valuers or other experts to value and realise the company’s assets, such as property, machinery, inventory, and intellectual property, and their fees would be included as part of the administration costs.

• Court Fees: If any court applications or hearings are required during the administration process, such as for obtaining court directions or seeking approval for a proposed course of action, court fees may be incurred.

• Disbursements and Expenses: The administrator may also incur various disbursements and expenses in the course of the company administration procedure, such as travel expenses, postage, stationery, and other administrative costs.

It’s important to note that the actual costs of an administration process can vary widely depending on the size and complexity of the company, the nature and value of its assets, the duration of the administration, and other factors. These costs are typically paid out of the company’s assets as part of the administration process and are subject to approval by the creditors or the court, as applicable. Creditors and stakeholders should seek professional advice and review the specific fee arrangements and cost estimates provided by the administrator in each individual case.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration including the costs of the company administration procedure. Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

The answer to this is Yes

During the course of a company administration, the administrator has powers to investigate the conduct of former directors of the company. The administrator is empowered under the Insolvency Act 1986 and has various statutory powers to gather information, examine records, and investigate the conduct of the company’s directors, including former directors, to ascertain the reasons for the company’s insolvency and the conduct of those involved. We are experts at defending claims by liquidators and administrators.

The legal responsibilities of a director to cooperate with an administrator are outlined in the Insolvency Act 1986 and other relevant legislation, and may include:

• Duty to provide information. A director has a duty to provide the administrator with any information, records, or explanations relating to the company’s affairs as may be reasonably required by the administrator for the purpose of the administration.

• Duty to attend meetings. A director may be required to attend meetings with the company administrator and provide explanations or answers to questions related to the company’s affairs.

• Duty to deliver company records. A director may be required to deliver to the administrator, or make available for inspection, the company’s books, records, and other relevant documents.

• Duty to provide assistance. A director may be required to provide assistance and cooperate with the company administrator in carrying out their duties and responsibilities, including providing access to the company’s premises, assets, and personnel.

Failure to cooperate with the administrator may have legal consequences, including potential liability for the director, and may result in further investigations or legal actions being taken against the director.

It’s important to note that the administrator’s powers and the director’s legal responsibilities during an administration may vary depending on the specific circumstances and the provisions of the Insolvency Act 1986 and other relevant legislation. Directors should seek legal advice to understand their obligations and responsibilities in an administration process.

Our expert company rescue team has been advising directors and businesses since 2002 on all aspects of company administration, including risks to directors and how to deal with them. Call Tim Francis or James Roberts direct today – they will be happy to speak to you straightaway, free of charge.

Using the expert team at Francis Wilks & Jones means that you will have all the benefits of our 20+ years expertise on dealing with company administrations.

• Expertise in insolvency law. Insolvency law is complex and constantly evolving, and navigating the intricacies of the administration process requires a deep understanding of the legal framework, including the Insolvency Act 1986, the Companies Act 2006, and other relevant legislation. Francis Wilks & Jones is highly experienced in insolvency work can provide expert advice on the legal requirements, obligations, and potential risks associated with the appointment of administrators and the administration process.

• Specialised knowledge and experience. Francis Wilks & Jones has acted for a wide range of Insolvency Practitioners since 2002. Our expertise in this area means we can help choose the right firm of IP’s for your business – something which is crucial to get right. Our team approach means a business is safe in the knowledge that they have experts acting for them across the entire administration process, such as restructuring, refinancing, and sales, and can provide tailored advice on the best approach for the specific circumstances of the company. Company Rescue is our expertise. This can help maximise the chances of a successful administration and optimize the outcome for all stakeholders involved.

• Proactive management of the administration process. The appointment of administrators and the administration process require careful management and oversight to ensure compliance with legal requirements and timely execution of necessary actions. As experienced law firm, Francis Wilks & Jones can proactively manage the administration process, including preparing and submitting the necessary documentation, coordinating with stakeholders, and overseeing the actions of the administrators to ensure that the administration proceeds smoothly and efficiently.

• Effective negotiation and dispute resolution. Administration can involve negotiations with creditors, stakeholders, and other parties, and disputes may arise during the process. Our experienced team can provide skilled negotiation and dispute resolution services to protect the interests of the company and its stakeholders. They can help negotiate favourable terms with creditors, resolve disputes that may arise during the company administration process, and advocate for the company’s interests in any legal proceedings, if necessary.

• Practical advice and strategic planning.  Our team, in tandem with the right insolvency practitioners can provide practical advice and strategic planning to guide the company through the administration process. This may include assessing the financial viability of the company, identifying restructuring or refinancing opportunities, evaluating potential risks and liabilities, and formulating a strategic plan to achieve the best possible outcome for the company and its stakeholders.

• Risk mitigation and compliance. The company administration process involves legal and regulatory requirements that must be met to ensure compliance and mitigate risks. Our experienced team can provide guidance on managing potential risks, such as avoiding wrongful trading, ensuring proper corporate governance, and complying with statutory obligations. This can help protect the company and its directors from potential legal and financial liabilities during the administration process. We also have a separate team which specialised in director defence claims should the worst happen.

• Efficient and timely process. Engaging Francis Wilks & Jones means you can ensure that the administration process is conducted efficiently and in a timely manner. We can assist with the preparation of necessary documentation, handle communication with stakeholders, coordinate with the administrators, and ensure that all legal requirements are met in a timely fashion. This can help streamline the company administration process and minimise any delays or complications that may arise.

• Peace of mind. Going through a company administration process is stressful and challenging for the company’s directors and stakeholders. Our team has helped 100’s of business through the Administration process. We know the stress it can cause, and can help give directors or business owners the peace of mind that they need. Engaging our team means the process is being handled by professionals with the necessary expertise, experience, and resources. We can take the guess work out of which Insolvency firm to use for the company in question. All this can allow the company’s directors to focus on other important aspects of the business while the administration is being carried out by qualified professionals.

• Access to networks and resources. Our team has a fantastic reputation in the insolvency & restructuring market. Over 20+ years, we have built up extensive networks and resources that can benefit the company undergoing administration. This includes relationships with potential investors, lenders, and other professionals who can provide additional support, advice, and solutions to help the company achieve a successful outcome from the administration process.

Generally speaking, a company in England may consider using the company administration procedure as set out in Schedule B of the Insolvency Act 1986 in the following situations:

• Financial distress. If a company is facing financial difficulties and is unable to pay its debts as they fall due, company administration may be considered as a way to provide breathing space and protection from legal actions by creditors.

• Asset preservation. If a company has valuable assets that need to be preserved, such as intellectual property, contracts, or goodwill, administration can be used to protect these assets and maximise their value.

• Restructuring and rescue. Company administration can be used as a tool for restructuring and rescuing a financially distressed company. It provides an opportunity to restructure the company’s operations, renegotiate contracts, and develop a plan to return the company to profitability.

• Creditor protection. If a company is under threat from aggressive creditor action, such as winding-up petitions or enforcement of security, administration can provide a moratorium on such actions, giving the company time to stabilise its affairs.

It’s important to note that the decision to enter into company administration should be based on a thorough assessment of the company’s financial situation and its future prospects. It should always be made in consultation with qualified legal and financial professionals. The company administration procedure has legal and financial implications, and the specific circumstances and timing for its use may vary depending on the unique circumstances of each case. It is why you should choose our team of experienced professionals to help.

Company administration under the Insolvency Act in England is a formal insolvency procedure that can offer both advantages and disadvantages to companies facing financial difficulties. Here are some potential advantages and disadvantages of company administration:

Advantages:

• Moratorium on legal actions. Once a company enters administration, a moratorium is automatically imposed, which prevents most legal actions by creditors, including enforcement of security, winding-up petitions, and legal proceedings. This provides the company with a breathing space to stabilise its affairs and develop a plan for its future.

• Business continuity. Unlike liquidation, which involves winding up the company, administration aims to rescue the company as a going concern. This means that the company can continue to trade and operate during the administration process, potentially preserving jobs, contracts, and relationships with customers and suppliers.

• Flexibility and control. The administrator, who is a licensed insolvency practitioner, takes control of the company’s affairs and has the flexibility to make decisions that are in the best interest of the company and its creditors. This can include restructuring the company’s operations, renegotiating contracts, and selling assets to maximise the returns to creditors.

• Potential for restructuring. Company Administration can provide an opportunity for the company to restructure its operations and debts, renegotiate contracts, and develop a plan to return to profitability. This can help the company to overcome financial difficulties and achieve a sustainable business model in the long term.

Disadvantages:

• Cost. Company administration can be an expensive process, as it involves fees for the insolvency practitioner who acts as the company administrator, as well as other costs associated with the process. These costs can potentially erode the available funds for distribution to creditors.

• Loss of control. Once a company enters administration, the directors lose control over the company’s affairs, and the company administrator takes over. This means that the directors may have limited involvement in decision-making during the administration process.

• Uncertain outcome. The outcome of a company administration process can be uncertain, as it depends on various factors, including the financial viability of the company, the ability to develop a successful restructuring plan, and the agreement of creditors. There is no guarantee that the company will be successfully rescued or that all creditors will be fully repaid.

• Impact on stakeholders. Company administration can have implications for various stakeholders, including shareholders, employees, and suppliers. For example, shareholders may face the risk of losing their investment, employees may experience uncertainty about their jobs, and suppliers may face potential losses if contracts are terminated or renegotiated.

It’s important to note that the advantages and disadvantages of company administration can vary depending on the specific circumstances of each case. It’s crucial to seek professional advice from a qualified insolvency practitioner and legal professional to fully understand the implications of company administration under the Insolvency Act in England & Wales and make informed decisions based on the unique circumstances of the company. That is why our fantastic administration team, with nationwide contacts to reputable insolvency practitioners is the right place to come.

Administration is not limited to “big” companies.

The Insolvency Act 1986 in England & Wales provides for administration as a procedure that can be used by companies of any size, from small to large. There are no specific requirements in terms of company size for initiating an administration. As long as a company meets the criteria for entering into administration, such as being unable to pay its debts or being at risk of becoming insolvent, it can consider using the company administration process as set out in the Insolvency Act 1986, regardless of its size. The appointment of an administrator can be made by a court order, a qualifying floating chargeholder, the company, or its directors, subject to the provisions of the Insolvency Act.

It is possible for a company in t change its name during the course of a company Administration.

• During an administration, the administrator appointed to manage the affairs of the company may take actions to protect and preserve the company’s assets, including its intellectual property, such as trademarks and trade names.
• If the company administrator determines that a change in the company’s name is necessary or beneficial for the administration process, they may apply to the relevant authorities, such as Companies House, to effect a change in the registered name of the company.
• This can involve registering a new name for the company or amending the existing name to reflect the company’s current circumstances or business operations.

It’s important to note that any change in a company’s name during administration must comply with the relevant legal requirements and be approved by the administrator, creditors, and/or the court, as applicable. The specific procedures and requirements for a name change during administration would depend on the circumstances of the individual case and should be carried out in accordance with the provisions of the Insolvency Act 1986 and other applicable laws and regulations.