Company Insolvency – Administration
Company Insolvency: Administration
Administration is the most commonly used insolvency mechanism for companies. It is designed to deal with situations when there is an urgent need to protect the value of a business from enforcement action by unpaid creditors or where a viable business needs breathing space to regroup and implement a survival strategy.
Administration is a formal insolvency process, which puts an immediate ring fence around the company and its assets so that no creditor can start or continue action to recover their debts. If your company is in debt and being pressurised by creditors, who are threatening legal proceedings or in the worst case scenario have issued a winding up petition then seeking the protection of Administration may be the best option.
When is the administration process used?
Administration works most effectively when:
- There are severe cash flow pressures, but there is a viable ongoing business to be saved;
- There is an urgent need to sell the business of a technically insolvent company to preserve as much of its value as possible;
- When creditors cannot be persuaded to a consensual compromise deal, such as delayed payments or debt write offs, either altogether or within a manageable timescale;
- Where a company is insolvent and the directors are concerned about the risks of wrongful trading.
In these circumstances it may be best to take urgent action to put the company into Administration; a legal process that requires the appointment of a licensed insolvency practitioner as Administrator.
Opus Restructuring & Insolvency are licensed insolvency practitioners and can accept appointment as Administrators.
Free Guides – What is Administration and what is Pre-Pack Administration?
Download our guides about administration and pre-pack administration.