Company Administration Advice

If your business is struggling and administration seems like a suitable route, our solicitors can provide advice and assistance with the process. Whether you are a company director, a creditor or an insolvency practitioner appointed as an administrator, we have the expertise to help you achieve the best possible outcome.

Where a company is insolvent and the directors believe that the potential of the company is about to be harmed by the actions of a hostile creditor - often an aggressive landlord or the Crown - thought should be given to going into administration. This protective mechanism is designed to shield the company from its creditors while a restructuring plan can be completed.

To speak to a solicitor about company administrations, get in touch by calling us on 0345 872 6666 or fill in our online enquiry form and we will get back to you.

How JMW Can Help

Our team provides targeted, commercially focused advice to directors, creditors and insolvency practitioners dealing with company administration and related matters. We work quickly, understand the commercial pressures involved and have experience advising across the full range of issues that arise before, during and after administration.

For company directors, we can:

• Advise on whether administration is the right option for your business.
• Assist in selecting an insolvency practitioner.
• Provide clear guidance on what steps to take before and during the administration process.
• Explore the possibility of a turnaround, a sale of the business or a pre-pack arrangement.

For creditors - including landlords, charge holders and suppliers with retention of title - we can:

• Respond quickly to notices of proposed administrator appointments.
• Assist qualifying floating charge holders in nominating an alternative insolvency practitioner.
• Advise on securing your position and reviewing relevant documentation, including guarantees, security and retention of title clauses.

For insolvency practitioners acting as administrators, we:

• Provide legal advice on the administration process and all relevant aspects of insolvency law.
• Support you with CVAs, restructurings, business and property sales, and group reorganisations.
• Investigate and advise on transactions entered into prior to insolvency, including potential claims against directors.

Our team works across insolvency, corporate, litigation and real estate, allowing us to provide joined-up advice without duplication or delay. Whether you’re planning an appointment, reacting to one or managing the legal framework around it, we can provide the support you need.

To explore alternative options, including liquidation and voluntary arrangements, visit our Restructuring and Insolvency hub.

Is Administration Suitable for All Companies?

Administration is typically more appropriate for reasonably sized companies with stable or predictable profitability and cash flow, despite their current financial distress. In these circumstances, placing the company into administration can offer a structured way to protect the business from legal action, stabilise operations and explore options for recovery or sale. An insolvent company with few assets, limited prospects and poor cash flow is more likely to be a candidate for creditors’ voluntary liquidation.

Administration is often used where there is a viable underlying business that could be rescued or sold as a going concern, preserving value for company shareholders, employees and creditors alike. It can also help prevent compulsory liquidation, which may otherwise follow if the company is unable to pay its debts and a winding-up petition is brought against it.

The Purpose of Administration

A company is in administration when a licensed insolvency practitioner is appointed as administrator to manage the affairs of the company for the benefit of its creditors. The administrator’s main aims are to:

• Attempt to rescue the company as a going concern
• Achieve a better outcome for creditors of the company than what would be achieved by liquidation

This might mean selling all or part of the business. If these aims are not possible, the administrator may realise the company’s assets and make a distribution to one or more secured or preferential creditors.

What Happens During Administration?

Once appointed, the administrator takes control of the company’s operations and assets. Their role is to assess the financial position, deal with urgent matters and develop proposals for achieving the purpose of the administration. This may involve continuing to trade the business, managing staff, dealing with creditors, and reviewing contracts or recent transactions. These actions form the foundation of the proposals put to creditors.

How an Administrator Rescues a Company

When a company enters into administration, Parliament’s preference is for the company’s business to continue as a going concern, saving as many jobs as possible. A Company Voluntary Arrangement (CVA) is one way for this to be achieved.

A CVA is a legally binding agreement with creditors, requiring in excess of 75% approval (in terms of total value of debt) from them to repay all or some of the company’s debts from future profits over an agreed time period.

Another option available to an administrator is to sell part or all of the business as a going concern. This means the business continues to operate and is sold as a trading entity, rather than being broken up and sold in parts. This involves marketing the business to potential buyers in order to attract as much interest as possible.

However, the process often moves quickly. Buyers usually have limited time to conduct due diligence and are unlikely to receive the usual warranties or guarantees about the business. This is because administrators act in the interests of creditors and need to complete a sale swiftly to protect value. As a result, buyers take on more risk, which may affect the sale price or limit who is willing to purchase the business.

The ‘pre-pack’ administration route is another viable solution. In this process, a buyer is identified before the company enters administration, allowing for a swift sale immediately after the administrator is appointed. This approach can facilitate the continuity of trading while preserving business value.

While a legitimate and regulated process, pre-pack sales can be contentious. They often involve the sale of viable parts of the business to a ‘newco’ formed by the existing management team or a third party, leaving liabilities with the ‘oldco’. Due to concerns around transparency and creditor outcomes, this procedure is subject to additional regulatory oversight to ensure compliance and fairness.

Appointing an Administrator for a Company

When a company enters administration, an insolvency practitioner must be appointed to act as the administrator. This individual takes on the role of an officer of the court and can be appointed by a number of parties, including:

• The company (i.e. its members/shareholders)
• The directors of the company
• The holder of a qualifying floating charge over the company’s assets
• The court

Appointing an administrator can happen relatively quickly if carried out by the company, its directors or someone holding qualifying floating charges, as a court order is often not required. In cases where a company is already in liquidation or has entered into a CVA, a court order is required. In addition, a creditor of a company must apply to court when they seek the appointment of an administrator over that company.

Qualifying floating charge holders, such as the bank, must be given five days' clear notice of the intention of the company or directors to appoint an administrator. The charge holder may then choose instead to appoint its own administrator.

Regardless of who appoints the administrator, it is the duty of those who appointed them to act in the interests of all creditors. The administrator must send notice of their appointment to each of the company’s creditors, the Registrar of Companies and the company itself. They must also publish notice in a newspaper local to the company’s place of business.

Any letter or business document sent out by or on behalf of the company or the administrator must show that the company is in administration, clearly state the name of the administrator, and confirm that the affairs and business of the company are being managed by them. Reference to the appointment of an administrator must also be included on any website set up by the company.

Placing a Moratorium on a Company

When you have started the procedure to enter into administration, a moratorium is placed on insolvency or any other legal proceedings against the company, and any pending winding-up petitions are suspended or dismissed.

If administrative receivers have already been appointed, they are required to vacate office - in essence, this means that no-one can “knock the company over” while it is in administration.

Supplying a Statement of the Company’s Affairs

One or more of the company’s directors is required to provide the administrator with a statement of the company’s affairs. This is a prescribed form used to detail the company’s assets and liabilities.

Attending the Initial Creditors’ Meeting

Within eight weeks of appointing an administrator, a statement must be circulated to the company’s creditors setting out proposals for achieving the purpose of the administration, along with an invitation to an initial creditors’ meeting.

Proposals may include a voluntary arrangement or a compromise or agreement with the company’s creditors or members. At the initial creditors’ meeting, the proposals will be voted upon and may be approved with or without modifications.

Ending Administration

Company administration is intended to be a temporary measure that provides breathing space for restructuring or achieving better outcomes for creditors. The process concludes once the administrator has either fulfilled the objectives of the administration or determined that these objectives are no longer achievable. The formal end to the administration can take several forms, depending on the company’s circumstances and the progress made during the process.

Administration ends when one or more of the following occurs:

• The purpose of the administration has been sufficiently achieved
• The administrator considers that the purpose of the administration cannot be achieved
• The administration has continued for 12 months or for a longer period approved by the creditors or the court
• The company is placed into creditors’ voluntary liquidation
• The company is dissolved

At the end of the administration, the administrator must notify Companies House and all relevant stakeholders of the outcome and any further steps to be taken. The next stage may involve liquidation, dissolution, or the continuation of the business under new ownership, depending on the result of the administration process.

Why Choose JMW?

We can provide tailored advice and assistance to company directors, creditors and insolvency practitioners on a wide range of issues relating to administration.

For directors, we can:

• Advise whether administration is appropriate
• Help with selecting an insolvency practitioner
• Give guidance on the necessary steps prior to and during administration
• Provide advice on the possibility of a turnaround or sale of the entire business, or part of it

For qualifying floating charge creditors who find they have received a letter informing them of the proposed appointment of an administrator, we can act quickly to assist with finding and appointing an alternative. For landlords, creditors with existing security or creditors with retention of title, we can provide advice and assistance with all relevant documentation.

Our team helps insolvency practitioners acting as administrators by:

• Providing advice on all aspects of insolvency law
• Assisting with the legal aspects of CVAs, group reorganisations and restructurings, business & property sales and pre-packs
• Investigating prior transactions entered into by the company or its directors.