Administrations

Business recovery and insolvency services

What is administration?
An administration order provides a company protection from its creditors, and allows breathing space. A licensed insolvency practitioner acts as the administrator to assist and propose a plan to restructure or sell the business and assets. An administration is used with the objective of:
  • Rescuing the company as a 'going concern' (the business is trading and will be able to make a profit)
  • Achieving a better result for the creditors than in liquidation
  • Or, as a mechanism to realise assets in order to make a distribution to one or more secured or preferential creditors

The administration process:

A company can enter into administration by two methods:
An application for a court order made by
  • The directors
  • One or more creditors
  • At least 50% of the shareholders
An administrator is appointment by: 
  • At least 50% of the shareholders
  • The directors (with the shareholders’ approval)
  • Any creditor who holds a Qualifying Floating Charge (QFC) - A lender (who typically has provided a loan or factoring facility) who has taken a charge over company property and has the option to place the company into administration
Proposals are issued to the creditors, explaining how the company intends to achieve the purpose of administration. A majority of the creditors who vote, by value, are required to approve the proposals.
When the purpose has been achieved, the administration can conclude with one of the following outcomes.
  • The company is returned to the control of its directors
  • The company enters into liquidation
  • If there are no funds available to pay the unsecured creditors, the company is dissolved

What are the advantages of administration?

  • To protect the company from creditors and any legal proceedings
  • To enable the company to be restructured, disposing of non-profitable parts and selling valuable parts of the business
  • The company may continue trading, often resulting in employees’ jobs being saved
  • The administrator is duty-bound to work for the benefit of all creditors
checking information on tab
preparing notes

What are the disadvantages of administration?

The directors may have to relinquish control of the company. Depending upon the purpose of administration, or if the business is sold to a third party, they may also be made redundant.

The administration will be noted publicly, recorded at Companies House, advertised in the London Gazette and must be shown on any correspondence including the company website, emails and purchase orders.

It may be more difficult for the company to trade as suppliers are unlikely to provide credit, instead require upfront payment. The company will need money to continue to trade.

The costs associated with administration can be high and can escalate quickly, if trading the company.

At Cullen & Co, Epsom, we have the expertise to provide effective business recovery strategies even for complex situations. We are always on hand to help you. Our services are available to businesses in London and across the South East of England.
We can help you get your business into better shape.

Call Cullen & Co on 0203 8877 200
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