Company Administration- a favourite Insolvency tool
When an administration is proposed, it is generally with the intention of saving the whole or part of the company as a going concern, proposing a CVA or achieving a better realisation than might be achieved if the company does not enter into an administration. If the company has a trading business that would be affected by any cessation in trade, then an admin must be considered. Any closure of stores, or for instance a public house, may lead to loss of confidence, and a resulting loss of trade. If the company is a people business and relies on its staff, then it will want to protect those staff and the relationships they have. A liquidation may cause a people business to lose staff, and contracts before a rescue package can be put in place. It would also work for a business that deals with perishable items and this can be combined with a centre-bind which would help the administrator sell these items before they spoiled. The proposed administrator will prepare his proposal, and present it to court. If the court thinks that there is merit in the proposal, time will be given to see those plans through to fruition. The administrator will then have three months to complete matters before the order expires. He may apply for more time if required, but he must show a reasonable chance of success. In the vast majority of cases a proposed administrator will have an exit route in mind and move very quickly to put that in place, before those deals expire. It is quite often the case that an administration will be accompanied by what is known as a pre-pack sale. This is where the going concern element of the business is hived off and sold immediately the company enters into administration to a party who has already agreed a price for the business and who can effectively continue to trade with existing staff and customers but without the hindrance of debt. Information provided by Steve Thatcher of Help With Debt (UK) Limited and total debt solutions company. sthatcher@helpwithdebtuk.com http://www.helpwithdebtuk.com 01162171406 About Author Steve is a qualified solicitor who specialises in debt solutions for businesses and companies alike. From pre-pack administrations to walk through bankruptcys he is always free to talk to. Disclaimer: Article submitters are solely responsible for the content of their articles. ArtiLib can't be held liable for the contents of the articles. Report Abuse | Browse By Category |
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