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What is the definition of a company administration order?

A company administration order is an order made by the court either by making an application to court or by filing a Notice of Appointment of an administrator which is known as the out of court process.

Company administration is essentially designed to rehabilitate a company that is experiencing some financial difficulty. A company placed into administration obtains a moratorium which means that action cannot be taken against the company whilst the moratorium is in place which gives the company time to reach some form of settlement with its creditors.

A company enters into administration once the court made an order that a company will be placed into administration or when the court has approved and stamped a copy of a Notice of Appointment and an insolvency practitioner is then appointed as an administrator. There can be more than one administrator appointed over an insolvent company, in fact there is no limit on how many administrators can be appointed over one insolvency company. The administrator will take control and management of the insolvent company.

The purpose of an administration

The Insolvency Act 1986 explains the purpose of administration:

“The administrator of a company must perform his 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
  • Realising property in order to make a distribution to one or more secured or preferential creditors”

If you require further advice regarding any company administration matter, please contact our expert team today and we can help you.

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