View Tim Corfield explaining
What is Administration?
What is an administration & How can it help you?
An Administration is a procedure to deal with the closure of your company if the company is insolvent – in other words, there are not enough company assets which can be sold or realised, to pay off all the debts of the company.
An Administration procedure is to be used (rather than a CVL or a CVA or a Pre-Pack Administration) if there is part or all of the business that can be sold or is worth trying to salvage. Usually, a Pre-Pack Administration is chosen for a smaller company. Of course, this is something that we will carefully review with you to make sure the right process is chosen to deal with your company.
We handle all the negotiations for you
As part of our work we will speak to your bankers, HMRC and any major supplier to explain the plan in more detail and get their support. These are delicate negotiations and not all Insolvency Practitioners have the experience or expertise to do this.
On appointment as Administrator we will effectively take charge of the running of the business.
What is the difference between pre-pack Administration and an Administration?
The major difference between these services is that with an administration there is not a purchaser who can immediately complete or that a longer marketing period for the business is likely to produce a much better sales price for the creditors.
What is the purpose of an Administration?
Immediately after my appointment as administrator, we will need to obtain an independent valuation of the business, work out a marketing strategy covering a two to three-week period, work out a trading strategy for the business, and so on.
The purpose of the administration is to try to sell the business on the most advantageous terms for the creditors. Usually a sale would be agreed with an entirely independent purchaser or sometimes there might be a management buyout, an MBO, to the existing management.
We need to demonstrate that the sale of the business using the administration process has a better outcome for creditors than any other insolvency process.
How long will the process take?
Once a purchaser for the business is found, a sale and purchase agreement will be drawn up. If all goes well, this should be done around week four of the administration. If there are no suitable offers for the business, as administrator I would ultimately have to cease trading and close the business.
We will arrange for these things to be done as quickly as possible, as time in these circumstances is often scarce. Once decisions have been made, I could be appointed as administrator within days.
A report to creditors outlining the strategy needs to be prepared by the administrator and sent to creditors within eight weeks of the appointment. No meeting of creditors is required unless specifically requested by the creditors, which is unusual.
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