You may be thinking about committing your company into administration which is not part of a pre pack sale of the assets back to you. Generally, administrations are very expensive and very quickly devour the company’s cash leaving very little funds, if any at all, for your creditors. Administration normally result in the company’s swift demise if the company cannot be sold immediately as a going concern. If you have given your bank or any other creditor a secured charge over your company’s assets they too may commit your company into administration should the company be in breach of its covenants.
While administration will provide the company with protection from its creditors taking legal action against it, the directors involuntarily concede control of the company’s management and their future to the administrator.
With all administrations the administrator has a legal duty to report on your conduct as a company director to the Secretary of State for Business Innovation and Skills (BIS) and explain the reason for your company’s failure. This includes any wrong doing on your part as company director’s misconduct must be disclosed to the authorities by the administrator. If the report is unfavourable to you then serious consequences could usually follow against you with personal liability.
There are normally other options to company administration that can be very favourable to your particular circumstance. We can discuss these with you or prepare you for administration while protecting your interest from any future claims against you personally as a company director. This means dealing with those difficult issues that surround you. We will also recommend one of our commercially minded insolvency practitioners to manage the administration process.