Administration

Key Benefits of Administration

– Immediate protection from legal action – A statutory moratorium stops creditor enforcement

– Preserves business value – The company’s financial position is stabilised to avoid further deterioration

– Reduces risk for directors – Minimises the chance of personal liability for wrongful trading

– Aims to benefit all creditors – Unlike Administrative Receivership, which prioritises specific lenders, Administration seeks the best outcome for all

– Opportunity to restructure – Loss-making parts of the business can be closed, while valuable operations may be sold or maintained

– Jobs can be preserved – In many cases, the core business can continue trading and staff retained; if redundancies are necessary, costs may be covered by the government (subject to TUPE regulations)

– Flexible management – Although rare, new directors can be appointed by the Administrator if current directors step aside

When is Administration Appropriate?

Administration is often used when:

– Creditors are threatening or have issued a Winding Up Petition

– Legal action is actively being pursed against the company

– A business needs breathing space to assess options for restructuring or sale