Corporate
Insolvency > Administration
Recent years have seen the emergence
of the rescue culture as evidenced by the willingness of
banks and other stakeholder groups to give companies experiencing
financial difficulties an opportunity to research business
turnaround. Administration is a process for a company that
is threatened by financial failure. The company usually
initiates the procedure in order to protect itself against
action from creditors and the court will make an administration
order if it is satisfied that one or more of the following
is likely to be achieved:
- the survival of the company and all or part of its business
as a going concern
- the approval of a company
voluntary arrangement
- the sanctioning of a compromise or scheme or arrangement
under section 425 of the Companies Act 1985
- a more advantageous realisation of the company’s
assets than would be achieved had liquidation proceedings
incepted
In view of the
requirement to satisfy the court that administration is
the appropriate way forward and is a suitable alternative
to liquidation, professional advice should be obtained at
the earliest opportunity because detailed work is required
at the outset.
The change to a floating chargeholder’s ability to
appoint a receiver for floating charges created after 15
September 2003 is likely to introduce more administrations
to the corporate arena. However, they can be an expensive
option and are not suited for every situation.
Administration: your question's answered
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