Statutory hierarchy
The objectives are hierarchical. Rescue as a going concern is considered first, followed where appropriate by a better result for creditors and, in more limited circumstances, a relevant distribution.
Company administration
Breathing space to protect value and pursue a statutory objective.
Administration can provide protection from creditor action. Its primary statutory objective is rescuing the company as a going concern. Where that is not reasonably practicable, an administrator may pursue a better result for creditors than liquidation or, in more limited circumstances, realise property for distribution to secured or preferential creditors.
Before the first call
Establish whether value can be protected quickly.
- Prepare a short-term cash flow forecast and identify immediate funding requirements.
- Gather current information on assets, secured lending, employees, key contracts and creditor action.
- Avoid commitments that could reduce value or compromise a potential sale or rescue plan.
When it may apply
Administration is considered where protection can support a better outcome.
The correct route depends on the full financial and commercial position. These indicators are a starting point, not a substitute for advice.
- The underlying business may be viable
- Creditor action threatens the company or its assets
- A funded trading period could preserve value
- A business or asset sale requires coordination
- Secured lenders and key stakeholders can be engaged
- Administration is likely to achieve one of the statutory objectives
Points to consider
What the board needs to understand.
We explain both the intended benefit and the practical implications before a decision is made.
Funding
Trading, professional costs and working capital require a credible funding plan.
Control
The administrator takes control of the company's affairs, business and property.
Moratorium
The statutory moratorium restricts many creditor actions, subject to the legislation and court supervision.
Employees and contracts
The trading plan must address payroll, suppliers, customers, leases and operational continuity.
Outcome
Administration is not an end in itself. The exit may involve rescue, sale, CVA, liquidation or dissolution.
The process
A clear sequence from advice to implementation.
- 01
Options review
Assess viability, creditor pressure, secured lending, assets, funding and the outcome likely to be achieved.
- 02
Planning
Prepare cash flow forecasts, valuations, stakeholder strategy and the proposed route through administration.
- 03
Appointment
Complete the appropriate appointment process and notify relevant parties.
- 04
Implementation and exit
The administrator pursues the statutory objective and proposals, reports to creditors and implements the appropriate exit.
Common questions
What directors usually want to know.
Every company is different. These answers provide general guidance only.
Does administration save every company?
No. Administration is appropriate only where a statutory purpose is likely to be achieved and the necessary funding and stakeholder conditions exist.
Can the directors remain involved?
The administrator controls the company. Directors may assist operationally, but their powers are restricted and subject to the administrator's authority.
What is a pre-pack sale?
A pre-pack involves negotiating a sale before appointment and completing it shortly afterwards. Valuation, marketing, disclosure and connected-party rules require careful attention.
How is administration funded?
Funding may come from existing cash, lenders, asset realisations, purchasers or other stakeholders. The plan must be credible before appointment.
A useful first step
Discuss the facts before deciding on a process.
Answer a small number of questions about the pressure facing the company. The initial discussion is free and without obligation. Fees for any formal work are explained before an instruction is accepted.