HomeFWJ TakeawayCompany rescueBusiness recovery and rescueWhat is the effect of an administration order?

An administration order for a financially distressed company brings about a protective moratorium to safeguard the company for the benefit of its general body of creditors.

An administration order has the following practical effect:

  • any petition for the winding up of the company shall be dismissed on the making of an administration order;
  • following a notice of appointment by a qualifying floating charge holder, any winding up petition, with the exception of those presented by the Secretary of State or the Financial Services Authority shall be suspended while the company is in administration;
  • any receiver of part of the company’s property shall vacate office on being asked to do so by the administrator;
  • no resolution may be passed for the winding up of the company;
  • no steps may be taken to enforce any security over the company’s property, or to repossess goods in the company’s possession except with the consent of the administrator or the court’s permission;
  • any landlord, or any other person to whom rent is payable, cannot obtain peaceful re-entry to premises let to the company who has not complied with any term or condition of the tenancy without the agreement of the administrator or the court’s permission;
  • no other legal process (including legal proceedings, execution, distress and diligence) may be commenced against the company or its property except with the agreement of the administrator or the court’s permission.

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