- If the company is facing serious threats from trade creditors, landlords, HP or lease creditors or any other creditors, which may serious implications on the company and it is decided at a rescue of the company (through the administration route) can be achieved, it is possible to file a Notice of Intention to Appoint an Administrator which puts the company into a moratorium (protects the company from actions against them) while this is explored.
In this period, debenture holders with a fixed and floating charge can appoint an administrator if they feel fit.
When an administration order is made by the Court, an administrator is appointed. The administrator will have a good look into the company and may do the following, if appropriate:-
- Trade the company and market it for sale
- Trade the company and finish contracts or sell stock to achieve an orderly wind down
- Have a sale for the Company lined up and sell on the date of appointment
- Realise the assets of the company and close it.
- Make an arrangement with the creditors and hand control back to the directors (i.e. put a Company Voluntary Arrangement in place ‘CVA’)
- A new company will purchase the assets that it wants from the administrator
- The new company can be connected by way of key persons
- These assets may include contracts or WIP and other intellectual property
- It is likely that certain asset values will be maximised as a result of a new Company continuing with the contracts (such as book debt realisations and retentions)
- The sale will usually happen on the date of the administration appointment
- Employees are usually transferred to the new company
- The new company can acquire the company name from the administrator
- HP assets/liabilities may be transferred to the new company as part of the sale agreement
- A pre-pack is useful to promote entrepreneurism and the law has been changed to allow this
If you are considering administration or require any further information, please contact us by email firstname.lastname@example.org or phone 01302 965485
For advice to directors in the hiatus period, please click HERE
For advice for to directors and employees on Employee claims, please click HERE