Administrators with balls

Administrators with balls…

Administrators may trade a company if they see an opportunity to
sell the company’s assets or maximising realisation of these.

When doing this, they face the conflicting interests of many of the stakeholders of the company.

Retaining employees means that the Administrators have the
burden of their remuneration and will be reluctant to do this if there is no
benefit. They will often reduce workforce to a skeleton staff. Contracts will
transfer if the company is sold as a going concern, and the purchasers
may attempt to clip the price to reflect the burden of inheriting employee
liabilities.

Directors fall into two categories – those who just want the
company to continue and the saving of employees’ jobs and those who have their
own interest at heart. The latter may want to purchase the company themselves
and may even jeopardise the sales process by withholding information from the
Administrator or may even put the potential purchasers off. A judgement call is
needed early on whether to retain directors or to remove them from the scene.

Secured creditors generally leave you to get on with it and may even finance
the working capital for trading.

Occasionally though, the secured creditor is not so patient and I have even come across
some who will try to interfere with the Administrator’s decisions. The Administrator
will aim to get the highest realisations for all creditors and as the secured creditor is at
the top of the list, they will benefit from this. Yet some will try to force Administrators to
accept the quickest way out rather than the best solution.

Unsecured creditors are the stakeholders usually responsible for
taking up a lot of the Administrator’s time. They will try all ways to recover
their monies, including Retention of Title (ROT) claims, Lien claims, refusing
to supply to the Administrators unless their balance is paid – to name but a
few. Claims over title of assets need dealing with early on and are
generally straight forward; sometimes commercial judgements need making.

Key suppliers and hauliers sometimes threaten to interrupt the supply of the goods
or services to make demands or increase prices. Sometimes, utility suppliers fall
into this category too. As a result, their blinkered view can halt the whole
trading process and forcing the company to break up. So they often need reminding
of the opportunities that continued trade may have to them.

These are just many of the balls that Administrators have to
juggle.

Author: Claire Foster

 

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