How much does an administration cost?

Administration is a process available to insolvent companies to provide protection from its creditors as the company is restructured, or the business and assets are sold.

The cost of an administration depends on the size and complexity of the job, and can be dependent on the amount of time the company is in administration for. 

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 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.

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

Berks Healthcare Services Limited

Kelly Burton • Healthcare • Administration

Wilson Field has advised on the sale of a Slough-nursing agency which was bought out of administration saving all 7 jobs.

Berks Healthcare Services Limited, which traded as Enchor Healthcare Services, specialised in providing healthcare professionals for the public and private sector.

It supplied registered general and mental health nursing staff, together with unqualified support and ancillary staff, to private hospitals and care homes in the areas local to the company’s offices in Slough, Portsmouth, Birmingham and Luton.

The company, headed up by healthcare professionals, called in administrators from Wilson Field after suffering from a fall in turnover, which left it struggling to meet unsustainable historic legacy debt. It had also been issued a winding-up petition from HMRC.

Kelly Burton and Emma Bower were appointed as joint administrators on 14 June 2018 and concluded the sale of the business and assets for an undisclosed sum to an unconnected company Connect Care & Support Limited, also based in Slough.

Kelly Burton, director and licensed insolvency practitioner at Wilson Field said: “The company had a turnover in the region of £2.9m per annum in 2017. However this is a very competitive marketplace, which is primarily price driven and recent minimum wage legislation changes had also impacted on the company’s potential profit margins.

“As administrators, we sought a purchaser for the business.

“This pre-packaged sale to Connect Care & Support Ltd saved seven permanent jobs as well as numerous temporary agency staff.

“It has also mitigated employee termination claims in the nature of wage arrears, accrued holiday pay, redundancy and pay in lieu of notice estimated to total £29,576 as the liabilities have transferred to the successor business under the TUPE regulations.

“This means the business has a new future moving forward.”

Berks Healthcare Services Ltd was incorporated in January 2015, but can be traced back to February 2007. Enchor Health Care was recognised and registered as Recruitment Consultants providing both permanent & temporary staffing solutions to many different Health and Social Care settings. It also had supported living and rehabilitation centres.

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.”

Print On Solutions Limited

Kelly Burton • Service Agency • Administration

A Leeds print company has been bought out of administration saving all 54 jobs.

Print On Solutions Limited was set up in 1999 years ago and went from start-up business to the largest envelope overprinter in the UK with offices in Leeds and Bury, 12 litho presses and six digital presses.

Administrators Kelly Burton and Joanne Wright from Sheffield business turnaround experts Wilson Field were appointed joint administrators on 11 April after the company, based in Century House, Holbeck, ran into financial difficulties following an ongoing dispute relating to a significant contract.

The directors took early advice and the business was sold to new company WEPOS Limited as a going concern saving all 54 employees’ jobs.

Kelly Burton from Wilson Field said:

“Following discussions with the directors, the business was sold to WEPOS Limited as a going concern, safeguarding all 54 employees’ jobs. The new company will offer the same service and standards and will operate under the same management team.”

In 2003 Print On expanded by moving to a 12,000 sq ft, purpose-built factory in Leeds, designed to offer the business a state-of-the-art platform for growth.

The expansion of the group was through strategic acquisitions and mergers of envelope manufacturers. Tower Envelopes in Bury merged with Print On in 2010 and became the Lancashire division.

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