Administration

 

This is a form of insolvency which, in general, is more suited to Limited Companies which find themselves in financial distress but there are special circumstances which would make the appropriate insolvency route an Administration instead of a Liquidation. 

In general terms, one of the critical criteria for proceeding with an Administration is that, it must be more beneficial for the creditors as an insolvency route than Liquidation. 

The various factors which allow such a statement to be made vary dramatically from case to case but examples could be said to be as follows:-

To allow the continued trade of the business to maximise realisations during the period of the Administration at a time when creditors would be prevented from doing diligence, enforcing securities etc. 

To allow the progress of a large insurance claim to be negotiated to the point of settlement at a time when the Company is currently unable to pay its debts as they fell due but would be able to do so if the claim was ingathered.

The benefits to the Company can include a moratorium from payment of certain liablities which alleviates immediate pressure, a chance to rescue the business if this is a realistic prospect and the opportunity to avoid the perceived stigma of a liquidation which may, in itself, diminish asset values.

It is only when we are provided with appropriate information at the initial consultation that we can give advice on whether Administration is a more appropriate route than Liquidation.