Administration is a corporate recovery procedure designed to protect companies from their creditors while a restructuring plan is developed. The type of creditor action that administration will stop includes:

  • bailiffs distraining on behalf of rating authorities
  • landlords distraint for arrears of rent
  • action by Revenue and Customs & Excise to enforce their debt

Following changes to legislation introduced in September 2003, the administration procedure is now streamlined which has resulted in reduced costs and better returns to creditors. An Administrator can be appointed by filing documents at court on the instruction of the Directors, a Qualifying Charge Holder, the Shareholders or by a Creditor. With a few exceptions, the administration must be concluded within a year.

The purpose of the administration must achieve the:

  • rescue of the company as a going concern or if that is not possible; or
  • achieving a better realisation of the company’s assets than in a liquidation.

Only if the neither of the first two purpose are possible, can the administrator use the third purpose:

  • realising property in order to make a payment to the company’s secured or preferential creditors.

If the deal is done immediately before or after an administrator is appointed, this is known as a pre-pack administration or pre-pack. To find out more about pre-packs, please see our pre-pack page.

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