HomeFWJ TakeawayResourcesWhat is a company in administration?

The company administration process is often referred to as a rescue process because the aim is to rescue the business and recover the company in order to avoid insolvency. When an administration order is made, whether “in court” or “out of court”, the company is then under the management of the administrator appointed by either the courts, the company’s creditors or the company directors.

After the administration order is made and the administration procedure commences, a moratorium also commences which puts a halt on any action against the company during that period

The purpose of an administration

The purpose of an administration order is so that the administrator of a company performs their functions with the objective of:

  • Rescuing the company as a going concern, or
  • Achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration); or
  • selling property / assets in order to make a distribution to one or more secured or preferential creditors.

The administration process can last from as little as a few weeks to up to a year or more depending on the circumstances of the company. Often the administrator will be keen to perform all of their statutory duties as quickly as possible which means in practice administrations can be quite speedy.

When a company enters administration all company control is passed to the appointed administrator whose main goal is to leverage the company’s assets and business in order to provide a return to the creditors as quickly and as fully as possible. The administrator is given a period of 8 weeks to send out formal administrative proposals to company’s creditors and will typically contain a basic plan of action that the administrator will follow to repay debts, information about the current status of the company and the administrator’s anticipated outcome.


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