What is an Administration? - Definition & Source of law of Insolvency Administrations - Benefits &implications

Administration Orders - Administrators - Administration appointments

What is an Administration?

An Administration is an insolvency process now governed by the law as set out in Schedule B1 and Schedule 1 of The Insolvency Act 1986. The Insolvency Act became law, as far as Administrations are concerned, on the 15th September 2003.

The main defining point about an Insolvency Administration Order is that:

"An Administration freezes creditors actions."

By that is meant the onset of Administration results in the facts that:

• landlords cannot distrain on your company's assets

• creditors cannot pursue court judgments against your company

• winding up petitions cannot be issued against your business

• bailiffs cannot seize assets or take "walking possession"

• H P companies cannot recover their assets

That "freeze" on creditors enforcement procedures provided by the Administrator's appointment gives directors the time needed to consider alternatives and to put a rescue plan in place. An Administration is, therefore, quite often an interim step to achieve a later objective such as a company voluntary arrangement.

In many instances an insolvency Administration can, however, stand on its own without necessarily there being a later insolvency process.

An administrator has a very wide range of powers including the right to dismiss directors! Take care and work out a strategy if you are considering the appointment of an administrator to your company. So ensure that you have comprehensive and free insolvency advice to ensure that you really know "what is an administration" before considering the pros and cons.