If your company is insolvent and struggling with intense levels of creditor pressure, you may be able to alleviate some of that pressure if you put your company into administration. The process protects your company from further creditor action, such as winding-up petitions or bailiff action, while your appointed administrator restructures the company and decides what to do next.
What is administration?
Administration is a formal insolvency process designed for businesses struggling from creditor pressure. It involves a licensed insolvency practitioner (IP) taking control of the company, protecting it from creditor pressure and allowing the IP time to plan a restructure, or to sell it. From there, the IP may choose to put the company into a Company Voluntary Arrangement (CVA) to repay the creditors a portion of their debt.More information on administration
How to put your company into administration
Before you can put your company into administration, you should contact us to discuss your options. Administration would be a suitable option if the three statutory purposes are achievable:
- The company can be rescued as a going concern.
- The creditors will receive a more substantial return than if the company were wound up.
- The funds generated from the realisation of property and assets would be distributed to secured or preferential creditors.
After speaking to our initial advisors and a free, impartial consultation, if administration would be the best option for your company, and the criteria could be achieved, we can proceed to the next stage of the process.
- Appointing an administrator
Unless creditors with floating charges force the company into administration, the company directors decide on the administrator. Once appointed, the administrator assesses the company and its finances.
The administrator then has eight-weeks to prepare the proposal, which is then sent to creditors. One or more of the company’s directors provide a statement of company affairs, detailing the company’s assets and liabilities, as well as their fixed and floating charges.
- Contacting the creditors and issuing the proposal
Once the administration proposal is complete, the administrator sends it, along with a statement of affairs, to the creditors and calls a creditors meeting. These no longer need to be physically held, and deemed consent can be used. Although the administrator must call a meeting if 10% of the creditors, by claims value, demand one. The creditors must be given two weeks’ notice before the creditors meeting, which must be held within ten weeks of the day the administration began.
- Administration begins
If the majority of your creditors accept the proposed administration, the administrator takes control of the company’s affairs. The creditors, court and registrar of companies must be kept updated every six months until the administration ends. Once the administration nears its end, they will decide if further action is needed to save the company.
Administration provides an insolvent limited company with some protection from creditors. Creditors with floating charges over assets can force your company into administration, or you can speak to us to instigate the process yourself. During the process, we will construct a restructuring plan tailored to your circumstances and decide the best way forward for your business, whether that’s repaying your creditors in instalments via a CVA, or through liquidating the company.
How we can help
If your company is insolvent, and creditors are putting you under pressure, you need to act quickly to avoid receiving a winding-up order. Contact us today if your limited company is suffering from creditor pressure and can’t repay its debts. Our initial advisors can provide free, impartial advice tailored to suit your circumstances and a no-obligation quote.
Book a free telephone consultation with one of our initial advisers