Company administration is a business rescue process. If your company is insolvent now but you want to continue trading, company administration aims to give you time to restructure so that your business can carry on – free from your current debts.
It can take two forms: administration or pre-pack administration. We’ve explained these two services below. They are both formal insolvency processes and so must be performed by a licensed insolvency practitioner.
If you need advice urgently or simply want to talk about the options available to you, our licensed insolvency practitioners and business rescue experts are ready to help.
What is company administration?
If your company is insolvent but has a core business that works, administration is a way of protecting your company from legal action by creditors and from potential liquidation. It essentially puts your financial situation on pause while we work out how – and if – we can save your business.
Your company needs to have a predictable cash flow and significant assets or value to make an administration viable. Don’t worry if this doesn’t apply to your company – there are other options for you. You could consider a Company Voluntary Arrangement (CVA) to put a stop to legal action by creditors. We can help you with this too.
How does company administration work?
After you’ve consulted a licensed insolvency practitioner and formally entered company administration, the control of your company is given to your chosen insolvency practitioner. They become the administrator while your company is in ‘pause’ mode.
During this time, we look at your cash flow and your assets, what’s working and what’s not. We then write a proposal for your creditors, telling them about your situation and whether we think we can rescue your company. If we do, we’ll set out the details of how the company is going to repay its debts.
There are other options for your company if your challenges can’t be solved during this administration phase. We’ve mentioned Company Voluntary Arrangement above. Another is a pre-pack administration.
What is pre-pack administration?
If we believe that the only way of saving your business is by selling some or all of it, we might recommend that this is done using a pre-pack administration.
A pre-pack administration involves selling all or some part of your business and its assets to a new company, which can be owned by your existing directors. The money from this sale repays your creditors as much as possible. Your business, under the new company, can continue to trade minus its debts. Your old company will be obsolete and we can close it using a liquidation process.
A pre-pack administration isn’t suitable for all companies. But if your directors have the capacity to buy the business from your company – and we can prove that it will give your creditors the most money back – it could be a good option for you.
Financial difficulties don’t have to mean the end of your business. As licensed insolvency practitioners, we can give you expert advice on using company administration as a business rescue solution and guide you through the process from beginning to end.
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