Why appoint an administrator

A quick guide to the process of company administration under the Insolvency Act What is administration? Administration is an insolvency process by which a company is placed under the control of an insolvency practitioner to enable him to achieve objectives laid down by statute. The first objective of any administration is to rescue the company as opposed to the business that the company carries on so that it can continue trading as a going concern paragraph 3 1 a , Schedule B1 , Insolvency Act IA If the rescue of the company is impossible, the administrator must aim to achieve a better result for the company's creditors as a whole than would be likely if the company were put into liquidation paragraph 3 1 b , Schedule B1.

If the administrator cannot achieve a better result for creditors as a whole, the purpose of the administration is to realise the company's property to make a distribution to the company's secured or preferential creditors paragraph 3 1 c , Schedule B1. To assist him in implementing these statutory objectives, a moratorium is provided by which creditors and others are prohibited from taking or pursuing legal proceedings against the company while it is in administration.

For more information on the statutory moratorium, see What does administration mean for a creditor of the company? How does a company go into administration? There are two ways in which a company can go into administration: by a court order made at a formal hearing or by certain parties lodging a series of prescribed documents at court the "out of court route".

An application for a court order can be made by one or more creditors of the company, the company itself, its directors, a liquidator , a supervisor of a company voluntary arrangement , or under section of the Financial Services and Markets Act or section 87A of the Magistrates' Courts Act A company can be put into administration by filing at court a notice of appointment and certain specified supporting documents. This procedure may be commenced by either the company or its directors, or a party often a bank or other commercial lender which has a floating charge that meets the requirements of paragraph 14 2 of Schedule B1 to the IA known as a qualifying floating charge holder QFCH.

A company cannot go into administration unless it is insolvent , or likely to become insolvent, but this requirement does not apply if the administration is commenced by a QFCH. For more information, see Flowchart, Routes into administration. An interim moratorium, to protect the company from the actions of creditors, will apply before the administration starts from the time an application is made to the court for an administration order, or, if the out of court route is used, from the time a notice of intention to appoint administrators is filed in court.

The administrator An administrator must be a qualified insolvency practitioner. Often more than one administrator is appointed to act jointly and, typically, severally, so that each administrator can act alone.

An administrator is an agent of the company to which he is appointed paragraph 69 , Schedule B1, IA and an officer of the court paragraph 5 , Schedule B1. He has a duty to act in good faith, fairly and honourably.

He must also be, and be seen to be, independent and impartial in his management of the company and its property. What does the administrator do? On appointment, an administrator must take all the company's property into his custody or control paragraph 67 , Schedule B1, IA An administrator has wide-reaching powers. He can do anything "necessary or expedient for the management of the affairs, business and property of the company" paragraph 59 1 , Schedule B1.

The administrator can, as the company's agent, cause the company to contract with third parties. Sums due under such contracts are paid in priority to the administrator's fees and expenses, and distributions to floating charge holders and unsecured creditors paragraph 99 4 , Schedule B1.

An administrator has a duty to perform his functions:. As quickly and efficiently as is reasonably practicable paragraph 4 , Schedule B1. Search for a licensed insolvency practitioner. If 2 or more administrators are appointed, they may operate individually or jointly, unless an order or resolution of appointment states otherwise. A notice of appointment must identify who made the appointment and, if the administrator was appointed by the court, who applied to the court for the appointment.

Once this notice is filed, your company's status on the Companies Register is changed to In voluntary administration. Within 3 working days, the administrator must also publish public notice of their appointment. This must appear in at least 1 newspaper in circulation in the area where your business is located. If the administrator dies, resigns or is disqualified, whoever made the original appointment may appoint a replacement. A replacement administrator must also be a licensed insolvency practitioner.

If a new administrator is appointed, they must file notice of their appointment with the Registrar, and publish a public notice of their appointment. The outgoing administrator must also give notice.

As soon as possible after appointment, the administrator must form an opinion and report on whether it would be in your creditors' interests for:. The administrator must report to us any serious problems relating to bodies corporate in administration. Report a serious problem. The administrator must also prepare and file reports with us as prescribed in Section 2 of the Companies Voluntary Administration Regulations and the Companies Reporting by Insolvency Practitioners Regulations The administrator must call a first creditors' meeting, followed by a watershed final creditors' meeting to decide the future of your company.

The Companies Office offers an online service to assist administrators with filing notices and reports, managing their document portfolios, and meeting their statutory reporting obligations. Get an overview of how companies are structured, find out about the company records you need to keep, and what's involved when you incorporate with and report to the Companies Office.

We also use cookies set by other sites to help us deliver content from their services. You can change your cookie settings at any time. They must send a copy to creditors, employees and Companies House and invite them to approve or amend the plans at a meeting. The administrator has control over your business during administration, eg they can cancel or renegotiate any contracts you have or make employees redundant.

Check what you need to do. To help us improve GOV. Which court should I file the notice of intention to appoint administrators in? What happens after I file the notice of intention at court? Who do I serve the notice of intention to appoint on? Appoint administrators by filing notice of their appointment at court.

When can the holder of a qualifying floating charge appoint an administrator out-of-court? Starting the out-of-court appointment when there are prior ranking qualifying floating charge holders. Starting the out-of-court appointment when there are no prior ranking qualifying floating charge holders. Appoint administrators during court hours by filing notice of their appointment at court.

Appoint administrators out of court hours by fax or email.