Creditor's Guide to Administration

We help creditors gain greater control and improve outcomes in the Administration process.

What is Administration?

Administration is a procedure that functions as a rescue mechanism for asset-rich but insolvent companies, and is usually a precursor or alternative to liquidation. The procedure allows a business to be:

Rescued as a going concern
Sold as whole
Offloaded in parts to realise cash for creditors.

How to enter

Following an application to court for an Administration Order, there are 3 ways a company can be placed into Administration:

In court
Out of court
If a charge holder (creditor) invites an Administrator (insolvency practitioner) to act as interim chief executive with custodial responsibility for the company's obligations and assets.

The information you disclose may be used to bring misfeasance or Director Disqualification Proceedings against you. A director accused of serious misconduct could face prosecution, and be banned from managing companies for up to 15 years.

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*Please note that we will not share your details with any third parties.

For guidance with an Administration procedure call 0207 504 1300 now

Charge Holders

Administration Procedures

Court Administration

Pre-Pack

Since the introduction of the Enterprise Act by Tony Blair's government in 2002, unscrupulous directors have used the legislation to:

Run up masses of debt
Place their business into Administration
Use a Pre-pack to buy the assets back from the Administrator without any of the debts, liabilities or creditors.

There are at least 2 conflict of interest issues in a Pre-Pack:

The Administrator's employment depends largely on whether their valuation of the business is agreeable to the director
The director acts as both seller and buyer.

Subsequently, if the director is unhappy with the appraisal, they're unlikely to hire the Administrator to coordinate the Pre-pack.

Tips For Creditors

In short, Pre-Packs are tricky. This is because the 1st time unsecured creditors usually become aware of the procedure is when the Administrator notifies them around 7 days later. Aside from due diligence and being cautious of who you give credit to, the best thing creditors can do to protect themselves is galvanize.

Above all; as soon as you hear about the Administration, you should encourage other creditors and suppliers to quickly arrange a Creditors' Meeting. Additionally, you'll find that forming a Committee of Creditors offers several advantages. Ultimately, creditors must try to replace the Administrator. This is because in a Pre-pack, no matter what the insolvency practitioner says: it's almost impossible for them to prioritise creditors' interests over those of the director.

In conclusion, creditors should appoint their own insolvency practitioner. But there must be enough assets in the business to pay the incoming Administrator or they probably won't take the job.

Administration is a complex issue and you will need expert advice and support. I&L can help creditors recover payments from overdue invoices. Call 020 7504 1300 now for free and confidential advice…

CALL 020 7504 1300

Call now 020 7504 1300 Monday to Friday 9am - 5pm for confidential free advice

Creditor's Guide to Administration

We help creditors gain greater control and improve outcomes in the Administration process.

What is Administration?

How to enter

Request call back

For guidance with an Administration procedure call 0207 504 1300 now

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