Company Administration

The company administration process is now well known as one of the most effective ways of providing a breathing space to allow a company to either trade out of its current financial difficulties, or to allow restructuring to take place.

What Is Company Administration?

Company administration is a formal insolvency process that is used specifically to assist in either a rescue of the Company itself, or its underlying business.

The process is undertaken by a Licensed Insolvency Practitioner, who oversees the formal process, the aim of which is to rescue and rehabilitate insolvent but potentially viable companies. On appointment an administrator becomes an officer of the Court.

How Is Company Administration Different To Insolvent Liquidation?

The Company Administration process is usually reserved for rescuing a Company or its business whilst an insolvent liquidation is usually used where there is no possibility of rescuing the business and the best outcome for the creditors is to immediately cease to trade and close the doors. In both a Company Administration process and insolvent liquidation, the appointed Licensed Insolvency Practitioner is under a duty to maximise the Company’s assets for the benefit of its creditors.

A Company Administrator has different statutory powers available to him from that of a liquidator, one of which is that it provides for a Company Administrator to continue trading the business whilst a purchaser is sought. A Company Administrator’s first aim, once appointed, is to seek a rescue of the business and then after making enough enquires if this is not possible, to realise the assets of the Company for the benefit of its creditors.

Who Appoints A Company Administrator?

An administrator may be appointed by the Court, by the holder of a floating charge or by the company or its directors. A floating charge is a form of security often held by banks or other lenders.

A creditor of the Company who holds the relevant security, often referred to as a floating charge holder and usually a Bank, has the right to appoint an Administrator over a Company, even without the Directors’ consent. However, that is relatively rare. A creditor who holds such security are classed as a secured creditor.

The secured creditor will usually be aware of the Company’s financial position, but if they are not, then it is recommended that you approach them, with the help of a Licensed Insolvency Practitioner, to get them involved as soon as possible in the process. They may be willing to help the Company or support the business through a sale to a new Company oif this is likely to result in a better outcome.

The directors of a Company may also appoint an Administrator and in this scenario any holder of a floating charge is entitled to five days clear notice of such an application.

How Do I know If A Company Administration Is Suitable Process For My Company?

If your Company is suffering from financial difficulty, then you need to speak with a Licensed Insolvency Practitioner as soon as possible.

The sooner you take advice, the better chance you have of rescuing your Company, or if that is not possible, its business. A Company Administration procedure will not always be suitable, especially if the business is not sustainable going forward.

A Licensed Insolvency Practitioner will provide you with the advice that you need and will discuss all the options that are available to the Board of Directors. As part of that advice, they will determine if Company Administration is an option for you to consider.

How Can McLenan Corporate Help Me?

First and foremost, we are Licensed Insolvency Practitioners, and this is what we specialise in. We are not affiliated to any other organisation and therefore we are able to provide you with complete independent advice. We will always ensure that upon speaking with the Directors of a Company that we explore all the options that are available.

It is our priority to keep your business away from a formal insolvency procedure. If this cannot be avoided, we will determine whether Company Administration is a suitable process.

We will work closely with you to understand your business in its entirety before providing you with any recommendations. In times of financial pressure, we understand the uncertainty and issues that are being faced, so here at McLenan Corporate, we provide all our initial advice and guidance free of charge.

Only in the event of formal instruction will we begin to charge fees and these will be agreed with the client, in writing, before any work is commenced and given that our professional charges are very competitive, we are in a position to provide the necessary help that you need.

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Email
info@mclenancorporate.com

Address
Marathon House, Olympic Business Park
Drybridge Rd, Ayrshire, Dundonald
Kilmarnock KA2 9AE

McLenan Corporate is a trading name of McLenan Corporate Solutions Limited, Marathon House, Olympic Business Park, Drybridge Rd, Ayrshire, Dundonald, Kilmarnock KA2 9AE. Company Number SC651445.

Margo McLenan is licensed to act as Insolvency Practitioner in the UK by the Insolvency Practitioner Association.

Insolvency Practitioners are bound by the Code of Ethics when carrying out all professional work relating to an insolvency appointment.