Administration
The purposes of Administration were changed by the introduction of the Enterprise Act 2002 on 15 September 2003.
The new purposes of Administration follow a strict hierarchy as follows:
- Rescue the company as a going concern and if not reasonably practicable then;
- Achieve a better result for the company's creditors as a whole than would be likely if the company were wound up and if not reasonably practicable then;
- Realise the company's property in order to make a distribution to one or more secured or preferential creditors
Old Administration
Prior to 15 September 2003, the procedure for the appointment of an Administrator solely involved the following:
| Petition | A Petition for an Administration Order is presented to the Court. The Petition could be presented by the Company, its directors or creditors |
| Independent Person's Report | The Petition was supported by an independent persons report, usually an Insolvency Practitioner |
| Notice | Following the Petition, notice was given to any Floating Charge holder who could then consider alternative course of action, such as appointing an Administrative Receiver |
| Administration Order | If successful, the Administration Order was granted |
| Administrators Duties | The Administrators duties were to manage the business. Make proposals as to the conduct of the Administration and call a meeting of creditors. |
| Creditors Meeting | A creditors meeting was held pursuant within three months of the Administration Order |
The new legislation provides for a similar procedure to the 'old style' Administration to be utilised in less common circumstances. The Enterprise Act 2003 introduced a new out-of-court procedure, which has largely replaced the 'old-style' Administration.
The 'old style' Administration is available where:
- Unsecured creditors wish to make an appointment
- An Administrative Receiver has been appointed
- A Provisional Liquidator has been appointed
- A Winding-Up Petition or Administration application is outstanding
New Out-of -Court Administration Procedure
The 'new' out-of-court procedure can be used where the appointment of an Administrator is being made by:
- The Company
- Its Directors
- A Qualifying Floating Charge Holder (QFCH)
Post-Appointment Procedure
Administrator's proposals to creditors
- Under the new regime the Administrator is required to send his statement of proposals to all known creditors within a period of eight weeks
- Notice of the initial creditors meeting is given with the proposals and the meeting must now be held within a period of ten weeks from the date of the Administration
Period of Administration
- Automatically ceases at the end of 12 months but can be extended
- If the out-of-court procedure is used and the purpose has been fulfilled, the Administration ends when the Administrator files the prescribed notice at Court
- The Court may order that the appointment ceases upon the application of a creditor
Statutory exit routes
- Creditors Voluntary Liquidation
- Dissolution