Administration provides an opportunity for the reorganisation or sale of a business. This option offers protection from creditors while the restructuring process takes place.
There are three statutory purposes of an administration;
- To rescue a company as a going concern.
- To achieve a better outcome for creditors.
- To realise company assets.
Administration is a very effective restructuring mechanism and in certain circumstances can be initiated by directors.
The role of the Administrator
Where a business is deemed to have a viable future, the insolvency practitioner (known as the Administrator) may consider it appropriate to continue to trade the business. Alternatively, a sale of the business may be deemed to be the best solution. The Administrator has the power to sell part, or all of a business in order to achieve one of the primary objectives of the Administration. At UHY Hacker Young, we can help you decide if Administration is the right route for your business.
Where the sale of a business is the appropriate course of action, it may be in the best interests of the company’s creditors that a ‘pre-pack’ Administration process is adopted. A pre-pack sale is an arrangement to sell all, or part of a company’s business or assets and is negotiated with a purchaser prior to the appointment of the Administrator. This differs to a normal sale whereby the Administrator markets the business and negotiates the terms of the sale after his appointment.
A pre-pack Administration can be a valuable solution to help maintain asset values, such as goodwill, and increases the likelihood of preservation of jobs. At UHY Hacker Young we have experience of all types of Administration and can help you decide which option is best for your business.
How it works
Whichever route is taken, the appointed Administrator has a duty to report to creditors following their appointment and to submit proposals on the strategy of the Administration for approval at a creditors meeting. The Administration process can end in one of several ways depending upon the circumstances of the case. The most common exit strategies are the proposal of a company voluntary arrangement, a liquidation or dissolution. At UHY Hacker Young we have the expertise to make sure you make the right decisions for your business.
The next step
If you think your business may be at risk of insolvency we can help. All you need to do is get in touch with a member of our team.