The prospect of putting your company into administration can feel extremely daunting if you don’t have experienced insolvency practitioners guiding you through the process.
If you are considering putting your business into administration, it is likely that you are already coming under pressure and scrutiny from creditors, landlords, shareholders or governing bodies.
You needn’t face this pressure alone. At First4lawyers, we can guide company owners and directors through the stressful administration process, and we work hard to relieve our clients of the burden.
If your company is insolvent or facing the prospect of administration, you can talk to First4lawyers. You will then potentially be put in touch with a solicitor who can give detailed guidance and legal representation throughout the process.
What are company administrations?
If your company is struggling to pay its debts, and you cannot reach an agreement with your creditors, you can appoint an administrator who will seek to prevent your company from being wound up.
If you choose to appoint an administrator, they will notify your creditors and Companies House of their appointment, and a moratorium will be put in place to freeze hostile actions by creditors against your company.
Once the moratorium is in place, your administrator has eight weeks to decide on the best course of action for your company and inform creditors, employees, and Companies House of their intentions.
The options available to your administrator include:
- The negotiation of a Company Voluntary Arrangement, whereby your creditors are repaid over a fixed period and your company continues to trade.
- Arranging for the business to be sold to another company as a going concern.
- Entering into voluntary liquidation, in which your company assets are sold off until creditors are paid and your company is then closed.
- The closure of the company, if there are no assets that can be sold.
Your administrator will, where possible, attempt to salvage the business and leave you in a position from which you can continue to trade.
Why should I put my company into administration?
The advantages of company administration over alternative options, such as compulsory liquidation or voluntary liquidation, include the fact that you can prevent creditors from taking further action by implementing a moratorium.
When creditors are attempting to claim back the money they are owed immediately, it can put you in an impossible situation, with the threat of your company being wound up looming over your head. But administration temporarily curtails the power of creditors and staves off the threat of liquidation while you take steps to achieve a better outcome for everyone concerned.
I am owed money by a company in administration – what should I do?
As a creditor of a company going into administration, you will be written to by the administrator to notify you of their appointment, and they should contact you again within eight weeks’ time to let you know of their intentions in a strategy document known as the ‘administrator’s proposals’.
You will be kept informed of the progress of the administration by an administrator’s report sent to you every six months.
If you are unsure of your legal rights as a creditor during the administration process, you can seek advice from a specialist insolvency solicitor.
I believe my business may need to go into administration – what should I do?
By seeking legal advice before taking any steps towards appointing an administrator, you can ensure that administration is the right course of action for your business, and does overstep any laws or regulation.
Insolvency specialists from First4lawyers can help you through the administration process, and advise you on whether it is the best option, and if so, whether you require a quick solution, known as a ‘pre-pack’ administration, or a more drawn out process.
You can contact First4lawyers to discuss your options and learn more about how we can help to rescue your business from the prospect of insolvency and liquidation.