How much does an administration cost?

The fees for an administration will vary depending on the circumstances surrounding the company. The level of debts the company has, number of creditors, the assets and liabilities of the company, including any contingent liabilities and assets which are subject to a fixed or floating charge.

Some insolvency practitioners may require an up-front fee for any advice on administrations, we require no such payment and can provide free confidential advice. After the company directors have discussed the options available via a cost-free consultation with one of our advisors and if we are chosen to act as administrators, it is at this point the arrangement commences and the appropriate costs will apply.

What is an administration?

An administration is a formal insolvency procedure that will protect the company from creditors whilst the process is ongoing, giving the company respite from creditor pressure. Administration is also an opportunity for the company to potentially be restructured, at the same time removing inefficient or non-profitable parts of the business.

The company can temporarily continue trading as a means of raising as much cash as possible for creditors or allowing time to seek a buyer for the business or assets. Directors lose control of the day-to-day workings of the business with the administrators taking temporary charge, as they plan the best way forward, whether it be through saving the company completely, selling parts of the business or liquidating the company and realising assets.

How is an administration paid for?

The fees involved throughout the process of an administration can be covered in several different ways.

• The company temporarily continues trading
  The Company may continue to trade under the control of the Administrators and costs may be covered from any profits generated.
• Sale of company assets
  If some of the assets within the company are sold, the funds acquired could be sufficient to cover the costs incurred by the IP carrying out the administration.

Why would I want to use an administration?

For insolvent companies, there are many advantages to entering administration. It gives the company breathing space to plan for survival. It can also prevent one creditor taking action which could be to the detriment to other creditors or indeed threaten the very future existence of the company.

• Protection from creditors
  An administration provides the company with protection from creditors whilst the process is ongoing and will halt any legal action creditors have taken such as county court judgements or winding-up petitions. It can provide massive respite for company directors who may have been dealing with lots of pressure.
• The company can be restructured
  With the possibility of the company being rescue during an administration, the protection from creditors allows the insolvency practitioners a great chance of restructuring the business to perform at a higher standard. With the advantage of time, the company could end up avoiding being wound-up.
• Creditors get the best return
  Insolvency practitioners will always look to get the maximum return to company creditors. An administration can provide a great opportunity for this, as if there’s a possibility the company can continue trading it can provide a greater return to creditors.
• Employees can continue
  If the company is restructured in a manner to continue trading, short-term or long-term, it provides some or all staff to continue working and therefore continue receiving their salary.

How we can help

If you’re worried about your company being insolvent or have creditors constantly breathing down your neck, it’s crucial to act as quickly as possible. Administration is only suitable for certain companies, depending on their situation. If you think it might be right for you, we can help guide you through the process and if it would suit your company. We offer free face-to-face consultations nationwide.

To discuss your company’s position, and find out how an administration could work in your situation, get in touch with a member of our advice team for free. It is important to act as soon as possible where unaffordable company debt is concerned. Call us today to arrange your free consultation. 

In summary

Company administration is a formal procedure which must be carried out by a licensed insolvency practitioner. It enables an IP to have control of the company and giving it protection against creditors, and plan the best way forward for the business.

Although we do not require an upfront fee to carry out an administration, the costs incurred during an administration will depend on the size and nature of the company, as well as the amount of time the company is in administration for, as well as any costs incurred for the realisation of assets.

Case Studies

Statestrong Limited

Kelly Burton • Manufacturing • Administration, Creditors Voluntary Liquidation (CVL)

Insolvency experts Wilson Field has helped turnaround the fortunes of a loss-making manufacturing company in Lancashire providing a new future for its 80 employees.

Businessman Russell Blaikie acquired the struggling 40-year-old Statestrong Limited, headquartered in Lytham St Annes, through a pre-pack sale and has been able to help the company immediately utilising his expertise in manufacturing and management.

Arrangements for the purchase of Statestrong’s business and assets were negotiated by Sheffield business specialists Wilson Field who affected the sale shortly after being appointed.

The company, which manufactures and supplies aerosol and liquid products for use in health and beauty, household, automotive and industry globally, posted sales of £12m last financial year, but had suffered pressure from creditors with outstanding arrears.
The total value of the deal is undisclosed but includes the business and the assets of the company based on Boundary Road in Lytham St Annes and Tarporley in Cheshire, which will now trade as Statestrong Products Limited.

Mr Blaikie said:

“Transactions of this nature are sensitive and require careful handling. The team at Wilson Field provided exactly the right professional approach.”

Wilson Field’s insolvency practitioners Kelly Burton and Joanne Wright worked closely with Mr Blaikie along with senior corporate case administrator Gareth Kinneavy.

Kelly Burton, said:

“The company had a wealth of expertise but was straddled with financial liabilities which ultimately made its future questionable. Looking forward, a previously distressed business now has a viable future.”

Oldham Precision

Kelly Burton • Construction & Engineering • Administration

Machining engineers Oldham Precision has been bought out of administration saving all 12 jobs.

The company’s principal activity was the sub-contracting manufacture of large volume batch precision machined components for clients across a wide range of industries including aerospace, paper converting, printing, coatings, electronics and valve construction.

Administrators Kelly Burton and Lisa Hogg from Sheffield business turnaround experts Wilson Field were appointed joint administrators on 17 January after the company suffered cash flow problems.

Originally established in 1982, the company, based at Red Rose Business Park on Shaw Rd in Royton, offered subcontract engineering including CNC milling, grinding and turning.

After advice from Wilson Field, the business was sold to the existing management team as a going concern saving all 12 employees’ jobs.

Kelly Burton, director in the Leeds office at Wilson Field said;

“Following discussions with the director, the business was sold as a going concern, safeguarding all 12 employees’ jobs and offering a better return for the company’s creditors than alternative options.

“The new company will be under the same management offering the same standards of service to its customers.”

Catering Butchers

Kelly Burton • Leisure & Hospitality • Administration

A previously successful, family-owned and managed catering butchers saw its turnover eradicated by the Covid 19 outbreak.

Following a review of all the options with the team at Wilson Field, the directors decided to appoint WF as Administrators.

Kelly Burton, director and insolvency practitioner at Wilson Field added:

“Like many over the pandemic, unfortunately there were some difficulties encountered as the business struggled to keep up its strong sales. However, we are continuing ro release the assets for the benefit of the creditors.”

Due to a lack of funding, the business unfortunately ceased to trade, however, the Administrators have managed to secure the debtor ledger and a sale of the remaining tangible assets, for the benefit of creditors.

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