Since the introduction of the corporate provisions of the Enterprise Act 2002 on 15th September 2003 Administration has become a cost effective way of preserving even small businesses. Companies can be taken into Administration by interested parties, usually the directors but on occasions by creditors. The Administrator must be an Insolvency Practitioner.
Once a company is in Administration its creditors are frozen and they cannot take action to recover old debts. In the right circumstances, the company will then continue to trade although the Administrator rather than the directors controls it.
It is important to realise that in these circumstances the Administrator controls the direction of the company.
Until the Administration is completed the directors only have powers that have been delegated to them.
However, in practice the Administrator and the directors will work together to preserve the business.
Most often, Administration is used to protect the company in the short term whilst a Company Voluntary Arrangement is proposed or to preserve the business pending a sale.
This is a brief overview of the Administration Procedure. For further information please contact Ian Williamson at Campbell Crossley & Davis on 01253 349331.
This note is meant as a brief overview of Administration. It is not a detailed review and further detailed advice should be taken before coming to any decision. No responsibility can be accepted by Campbell Crossley and Davis, its partners or employees for any loss occasioned by any person or persons acting or refraining from action as a result of material contained in this note. |
