How to Put a Company into Administration
Often, this is led by the directors of the company itself, or by its shareholders. It is possible in many circumstances for the directors or shareholders to pass a resolution to place the company into administration – provided that it is insolvent and various other requirements are met. This is most often done by way of engaging an insolvency practitioner to act as an administrator, and then liaising with lawyers such as Blake-Turner to draft the relevant appointment documents and ensure that they are filed at Court following the correct procedures.
Out of Court route
This procedure is generally referred to as the “out of court” route to appointing an administrator. There is no need for a hearing at court and a moratorium is immediately put into place as soon as the relevant papers are filed at Court. This means that the company gets immediate protection from its creditors, who cannot take further action against the company without the consent of the court, or administrators. Similarly, it prohibits landlords from re-entering premises or forfeiting leases.
A lender such as a bank that holds a “qualifying floating charge” over a company, such as a debenture or similar security registered at Companies House, can also use the “out of court” route to appoint administrators. Again, upon a qualifying floating charge holder filing the relevant documents at court, the company enjoys the same protection from its creditors.
Administration Order
It is also possible, and in many cases necessary, for a director, shareholder and/or creditor to apply to Court for an Administration Order. This procedure is most often necessary when there is either a shareholder dispute, which means that the shareholders and board cannot pass a resolution to appoint administrators, or in circumstances where a creditor has already issued a winding up petition against a company.
The courts generally treat applications for administration orders as urgent. The relevant parties need to attend at court and establish to the judge’s satisfaction that the company is insolvent and it is in its best interests (and crucially those of its creditors) for it to enter into administration.
There are other routes and procedures that an insolvent company can take. These include liquidation and creditors’ voluntary arrangements (CVAs). Please click on the foregoing links for information about those, or the following link for further information about administration.
If you would like to speak to one of the team at Blake-Turner about administration, or indeed any company insolvencies, cash flow difficulties or shareholder disputes, please contact Paul Cooper on +44 (0) 7967 014788 and/or paul.cooper@blaketurner.com.