Only a licensed insolvency practitioner can be appointed as an Administrator of a company.
Using the out of Court process, a company / its directors or, alternatively, a secured lender with a qualifying floating charge can appoint an Administrator
in a relatively short space of time. By filing a Notice of Intention to appoint an Administrator, this provides statutory moratorium protection of
a company’s assets immediately.
There are certain preconditions which must be satisfied before the out of Court procedure can be implemented, for example, if there is an outstanding Winding
Up Petition it is not possible for the company / its directors to appoint an Administrator, whereas a secured lender is not subject to this rule.
If the Court led route is preferred, then an application to Court for an Administration Order is required, which will be supported by witness statements
and a hearing will be scheduled to take place – meaning that this could be some time before a company can enter into Administration.
An Administration must be able to achieve one of three statutory purposes:
- Rescue the company as a going concern
- Achieve a better result for creditors than what would be achieved through liquidation
- Realise assets for either Secured or Preferential creditors
Sometimes the administrator will choose to trade the business during administration if he thinks that it can be rescued as a going concern or if it is
considered beneficial for creditors and a trading profit will be generated.