In times of financial difficulties

Corporate Recovery and Insolvency terminology

Administrations

Directors, companies or holders of qualifying floating charges (usually banks) may appoint an Administrator without applying to Court. The purpose of such an Administration is to save the company (as apposed to only saving the business) or to realise the maximum value for the company's assets for the benefit of the creditors generally.

Alternatively, a company may apply to the Court for an Administration Order, which protects the company from its creditors while it resolves its financial difficulties. The Insolvency Practitioner appointed will be responsible for running the company whilst considering how to achieve the purpose for which he was appointed, i.e. save the business, enter into an arrangement or achieve a better result than would be achieved in a liquidation. The administration procedure may be used on its own to facilitate company restructuring or to enable protection from the company’s creditors whilst it proposes a CVA to its creditors.