A Company Administration is a process undertaken by Licensed Insolvency Practitioners when they are called upon by a Company’s directors who require professional advice because of mounting creditor pressure.
A Company administration process is usually undertaken when the underlying business of the Company can be saved and sold as part of the Company administration process.
What is Company Administration?
Company Administration is a formal insolvency procedure that is used specifically to assist in the either a rescue of the Company itself, or its underlying business. The process is undertaken by a Licensed Insolvency Practitioner, who becomes the Company’s Administrator once appointed and they oversee the formal process which usually provides for a better outcome for creditors than if the Company went into insolvent liquidation.
How is Company Administration different to Insolvent Liquidation?
The Company Administration process is usually reserved for rescuing a Company or its business whilst an insolvent liquidation is usually used whereby there is no possibility of rescuing the business and the best outcome for the creditors is to immediately cease to trade and close the doors. In both a Company Administration process and insolvent liquidation, the appointed Licensed Insolvency Practitioner is under a duty to maximise the Company’s assets for the benefit of its creditors.
A Company Administrator has different statutory powers available to him from that of a liquidator, one of which is that it provides for a Company Administrator to continue trading the business whilst a purchaser is sought. A Company Administrator’s first aim, once appointed, is to seek a rescue of the business and then after making sufficient enquires if this is not possible, to realise the assets of the Company for the benefit of its creditors.
Is a Pre-Pack a Company Administration?
The term pre-pack is often used when referring to a Company Administration process. Further reading on this subject can be found in our services menu, or alternatively, you can visit our pre pack administration page.
Who appoints a Company Administrator?
A creditor of the Company who holds security, often referred to as a debenture holder and usually a Bank, has the right to appoint an Administrator over a Company, even without the Directors’ consent. However, that is relatively rare. A creditor who holds such security are classed as a secured creditor. The secured creditor will usually be aware of the Company’s financial position, but if they are not, then it is recommended that you approach them, with the help of a Licensed Insolvency Practitioner, to get them involved as soon as possible in the process. They may be willing to help the Company, or support the business through a sale to a new Company.
How do I know if a Company Administration is suitable process for my Company?
If your Company is suffering from financial difficulty, then you need to speak with a Licensed Insolvency Practitioner as soon as possible. The sooner you take advice, the better chance you have of rescuing your Company, or if that is not possible, its business. A Company Administration procedure will not always be suitable, especially if the business is not sustainable going forward. A Licensed Insolvency Practitioner will provide you with the advice that you need and will discuss all of the options that are available to the Board of Directors. As part of that advice, they will determine if Company Administration is an option for you to consider.
How can CFS Restructuring LLP help me?
First and foremost, we are Licensed Insolvency Practitioners and this is all that we do.
We are not affiliated to any other organisation and therefore we are in a position to provide you with complete independent advice. We will always ensure that upon speaking with the Directors of a Company that we explore all of the options that are available. It is our priority to keep your business away from a formal insolvency procedure. If this cannot be avoided, we will determine whether Company Administration is a suitable process.
We will work closely with you to understand your business in its entirety before providing you with any recommendations. In times of financial pressure, we understand the uncertainty and issues that are being faced, so here at CFS restructuring LLP, we provide all of our initial advice and guidance free of charge.
Only in the event of formal instruction will we begin to charge fees and these will be agreed with the client, in writing, before any work is commenced and given that our professional charges are acknowledged as being amongst the lowest in the profession, we are in a position to provide the necessary help that you need.