What
type of applications can be made to place the
company into Administration?
Who
can make Out Of Court Applications?
When
is it appropriate to make a Court Application
for the Administration?
What
are the purposes of the Administration?
What
are the general duties of the Administrator?
What
are the directors required to provide
once the company is in Administration?
What
information will creditors be entitled to receive?
Will
there be a meeting that creditors can attend?
Can
creditors take any legal action against the company
once it is in Administration?
How
long does an Administration last?
What
happens to the company at the end of the Administration?
What type
of applications can be made to place the company
into Administration?
Out of Court appointments are made when the relevant
documents are filed in Court and the appointment is made
on their receipt.
Court Applications are more complex and involve making an application for the Administration Order to be heard. This requires the provision of more detailed information to the Court for their  consideration and tends to be more costly than out of court procedures.
Who can make Out Of Court Applications?
Qualifying Floating Charge holders, directors or the company can make out of court applications.
When is it appropriate to make a
Court Application for the Administration?
The directors
cannot make an Out of Court appointment where:
a petition to wind the company up has been presented;
an application to court for an Administrator
has been made and has not yet been disposed of;
or
when an Administrative Receiver is in office.
What are the purposes of
an Administration?
The Administrators' primary goal is to rescue
the company as a going concern.
If this is not possible, the secondary objective is aimed at achieving a better result for the company's creditors than if the company were to be wound up.
If neither of these goals can be obtained, the final aim is to realise the assets in order to make a distribution to one or more preferential creditors.
What are the general duties
of the Administrator?
The Administrator:
is an Officer of the Court and therefore owes duties to both the Court and creditors generally;
has to perform their duty with the three previously mentioned purposes in mind;
has to perform their function as quickly and effectively as is reasonably practicable;
must take custody or control of all property to which he thinks the company is entitled; and
must submit a report on the conduct of the directors
to the DTI within 6 months of the appointment.
What are the directors required
to provide once the company is in Administration?
The directors must comply with any reasonable requests for information made by the Administrator and co-operate at all times. They would also be asked to submit a statement of the company's assets and liabilities as at the date of the appointment of the Administrator, known as a Statement of Affairs.
A questionnaire would also be sent to the directors in respect of the company
and their conduct.
What information will creditors
be entitled to receive?
The Administrator must send their proposals to creditors
within eight weeks of their appointment detailing their
dealings with the company.
This document would contain a history of the company, financial information, the statement of affairs, conduct of the Administration to date, details of any receipts and payments and information regarding how the Administrator intends to continue dealing with the company.
Will there be a meeting
that creditors can attend?
The aim of the creditors' meeting is to consider whether the creditors accept the Administrator's proposal with or without any modifications. The directors do not have to attend this meeting.
If it is anticipated that there would be no dividend available to creditors, their vote can be cast by correspondence only.
Can creditors take any
legal action against the company once it is in Administration?
No resolution can be passed to wind the company up. Furthermore,
without the consent of the Administrator or permission
of court:
no steps can be taken to enforce security;
no steps can be taken to repossess goods in the company’s
possession under a hire purchase agreement, chattel
leasing agreement or under retention of title;
landlords may not instigate or continue distress
against the company, exercise the rights of forfeiture
by peaceable re-entry or apply to court for forfeiture;
and
no legal proceedings may be commenced or continued against the company.
How long does an Administration
last?
The Administration automatically terminates after one year unless consent for an extention has been given by creditors or the court, the Administrator ends the process earlier by placing the company into another insolvency procedure or the company is dissolved.
What happens
to the company at the end of the Administration?
handed back to the directors;
placed into Liquidation;
entered into a CVA; or
be dissolved.
We understand that you
may require guidance and encouragement to help you through
these difficult times.
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