{"id":176464,"date":"2022-10-06T17:13:22","date_gmt":"2022-10-06T16:13:22","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=176464"},"modified":"2025-07-02T00:38:57","modified_gmt":"2025-07-01T23:38:57","slug":"business-insolvency-administration","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/business-insolvency-administration\/","title":{"rendered":"My Business is Facing Insolvency. What is Administration in England?"},"content":{"rendered":"\n

As a\u00a0 company director or shareholder, you could face insolvency if your business is not running smoothly and is in trouble. This is a worst-case scenario and one you, as a business owner or shareholder, no doubt hope will not occur. However, if it does, you will receive a notice that a court has ordered <\/span>your company into administration<\/span><\/a>. Understanding the practical effects of administration is in your best interest as a company director or shareholder. To help, this article will explain what administration means for you if your business faces insolvency.<\/span><\/p>\n\n\n\n

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This article explores administration from the perspective of a company facing insolvency. If another insolvent company owes your business money, discover <\/span>what administration means for you<\/a> as a trade creditor.<\/p>\n<\/div>\n\n\n\n

Why Administration?<\/span><\/h2>\n\n\n\n

Administration is a form of <\/span>formal insolvency proceeding<\/span><\/a> that a court can order against a company or business like yours. When the court makes the order, it appoints an administrator who oversees the process. The administrator is a licensed insolvency practitioner, meaning they are court officers. Licensed practitioners are typically accountants by trade.<\/span><\/p>\n\n\n\n

The purpose of administration and the role of the administrator is to:<\/span><\/p>\n\n\n\n

  1. If possible, rescue your business, allowing it to continue trading.<\/span><\/li>
  2. If the administrator does not think they can rescue the business, they can wind the company\u2019s business up. Winding up a business involves selling its assets and using the proceeds to pay back the company\u2019s creditors.<\/span><\/li>
  3. Alternatively, the administrator may conclude that although they can rescue the business, your company\u2019s creditors are better served in a windup. Practically, it almost certainly means that you will not receive anything. <\/span><\/li><\/ol>\n\n\n\n

    There are several ways an administrator can rescue your company. Most rescues end with the administrator selling the company to a buyer at a discount. The terms of the sale usually require the buyer to inject cash into your business, which the business then must use to pay off the creditors. As a shareholder, there is no guarantee that you will receive a return on your investment during such a sale. <\/span><\/p>\n\n\n\n

    The Moratorium <\/span><\/h3>\n\n\n\n

    If your business faces insolvency, the court places your company in administration, the law automatically imposes a moratorium. This means that your company\u2019s creditors cannot start any legal action against your company while the administration process is ongoing. Therefore, the administrator can handle your company\u2019s affairs without simultaneously responding to several lawsuits against your company. <\/span><\/p>\n\n\n\n

    Who Might Apply For an Administration Order?<\/span><\/h2>\n\n\n\n

    If your business looks likely to face insolvency, different people can apply to the court to issue an administrative order. These are:<\/span><\/p>\n\n\n\n