Company administration

Administration is a rescue procedure that puts a company under the control of a Licensed Insolvency Practitioner, the administrator, and creates a legal moratorium that stops creditors taking action, including pausing a winding-up petition. Its statutory purpose is, first, to rescue the company as a going concern; if that is not possible, to achieve a better result for creditors than an immediate liquidation; and only failing that, to realise assets. It is most useful where a business is viable but under immediate creditor pressure, or where there is goodwill, contracts or assets worth more sold as a going concern than broken up. Administration buys time and protection that a liquidation does not. It is more expensive and more involved than a CVL, so it suits larger or rescuable businesses. A practitioner will tell you quickly whether your company is a realistic candidate. Insolvency Act 1986, Schedule B1; gov.uk

Key facts

What it does: Hands control to an administrator and freezes creditor action
The moratorium: Stops legal action, including a winding-up petition
Statutory purpose: Rescue first, better-than-liquidation second
Best for: Viable businesses under immediate pressure, or with saleable goodwill
Versus CVL: More protection and cost; for rescue, not just closure

The moratorium is the point

The instant protection from creditor action is what makes administration powerful. If you are facing a winding-up petition or aggressive creditor pressure but the business itself is sound, administration can hold the line while a sale or restructuring is arranged.

Administration, CVA or pre-pack?

If the business needs breathing space to repay over time, a CVA may fit better. If a fast sale of the business is the best outcome, a pre-pack administration may be used. The right tool depends on viability, assets and creditor mix.

Common questions

Does administration stop a winding-up petition?

Yes. The administration moratorium halts most creditor action, including an outstanding petition, which is one reason it is used when a company is under immediate court threat.

Can a company come out of administration trading?

Yes, that is the first statutory objective. The company may be rescued and handed back, sold as a going concern, or restructured. If rescue is not possible the administrator pursues the best result for creditors.

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Company administration. Administration is a rescue procedure that puts a company under the control of a Licensed Insolvency Practitioner, the administrator, and creates a legal moratorium that stops creditors taking action, including pausing a winding-up petition. Its statutory purpose is, first, to rescue the company as a going concern; if that is not possible, to achieve a better result for creditors than an immediate liquidation; and only failing that, to realise assets. It is most useful where a business is viable but under immediate creditor pressure, or where there is goodwill, contracts or assets worth more sold as a going concern than broken up. Administration buys time and protection that a liquidation does not. It is more expensive and more involved than a CVL, so it suits larger or rescuable businesses. A practitioner will tell you quickly whether your company is a realistic candidate.

Speak to a Licensed Insolvency Practitioner

Tell us briefly what is happening and we will arrange a free, confidential, no obligation call with a Licensed Insolvency Practitioner. The earlier you get advice, the more options you usually have.

Free, confidential and no obligation. We are an independent information service and introduce directors to a Licensed Insolvency Practitioner. This is general information, not regulated advice.