A company can be put into administration without a formal administration order by filing certain papers in court without the need for a court hearing.
Out of court administration process
This procedure may be commenced by either the company or its directors, or a qualifying floating charge holder (QFCH – usually a lender who has security by way of floating charge over all assets of the company not caught by a fixed charge).
- Generally, a company cannot go into administration unless it is insolvent, or if the administration is commenced by a QFCH, in which case, the QFCH only needs to show that the company is in default of its QFC security terms.
- If the company or the directors are appointing and there is a QFCH registered against the company (or in the case of a QFCH appointment, there is a prior ranking QFCH), notice of intention to appoint administrators must first be given to the QFCH, who has overriding powers to appoint administrators of its own choice.
- In terms of what happens if a company goes into administration it makes no difference if the company entered into administration using an out of court appointment or administration order.