An Administration is a very powerful Insolvency procedure for insolvent companies. It protects the company from its creditors and prevents them from applying to wind the company up during the administration.

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What is company Administration?

An Administration is a very powerful Insolvency procedure for insolvent companies. It protects the company from its creditors and prevents them from applying to wind the company up during the administration.

Why would a business enter Administration?

Administration gives the company the breathing space in order for the Directors and the Insolvency Practitioner to formulate a plan to attempt to save some or all of the business. Usually, administration is used to help save employees from losing their jobs. It can also mean that the company doesn’t have to pay all its debts in full.

Does an administration guarantee the rescue of a company?

If the Administrator, who must be an Insolvency Practitioner, cannot rescue the business thou then a sale of the business as a whole or its assets may take place. The company may however still ultimately end up being liquidated.

How to enter your company into Administration

You must appoint a licensed Insolvency Practitioner. From the date of the appointment you must hand over all control of the company and its assets to the Administrator.  They then have eight weeks in which to formulate a proposal which will confirm how they intend to deal with the company for the benefit of the company’s creditors. The usual proposal put forward by an Administrator are;

  • Sell the business assets under a Creditors Voluntary Liquidation to pay the creditors
  • Keep trading the company under a Company Voluntary arrangement (CVA)
  • Close the business as there is nothing to sell
  • To sell the company as a ‘going concern’ to another entity ensuring the continuation of any contracts, orders and retaining the workforce.

Advantages of going into Administration 

  • Legal action against the company is suspended
  • Restructuring of the business can take place
  • Maximum return provided to the creditors

Disadvantages of going into Administration 

  • Directors lose control of the company
  • Creditor awareness due to publicity could affect trading
  • A creditor may have the ability to appoint their own Administrator

Company administration could be the key to protecting your business in this difficult time. To discuss in confidence contact our professional team today.

Administration JT Maxwell

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What should I do if insolvency appears likely?

Do not bury your head in the sand! If you are a company director, you should certainly not just resign (which could be a breach of your duty as a company director) and do not just continue to trade (which could lead to personal liability). Take advice as soon as possible and act on that advice and, in particular, do not transfer assets without first obtaining advice.

What are the consequences of being a director of a company which has been put into administration or liquidated?

You could be made personally liable for your company's debts and could face criminal prosecution, a fine, and/or disqualification as a director. If you have personally guaranteed the company's debts you will be required to honour those guarantees. For the next five years you are not allowed to be a director of another company with a similar name without the court's permission.

Will I be disqualified as a director?

In reality this seems unlikely as less than 10% of directors of insolvent companies are disqualified.  But disqualification proceedings may be brought if warranted by the directors conduct, but even in those cases the Insolvency Service would usually seek to obtain an undertaking from the director which has the same effect as a disqualification order. The minimum period of disqualification is 2 years and the maximum 15 years and prevents an individual from being a director of a company or being concerned in or taking part in the promotion, formation or management of a company.

Will I have to face the company’s creditors?

If there is an insolvent liquidation, then a meeting of creditors must be convened. In a creditor’s voluntary liquidation, a director is required by statute to attend and chair the Meeting of Creditors, however in a Court liquidation this is at the discretion of the interim Liquidator.

Administration JT Maxwell
Administration JT Maxwell

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Our aim here at JT Maxwell is to help change the perception of our industry. And the reason for this is simple: we passionately believe that the service which we provide is incredibly valuable, not just for businesses, but also in a personal context.

Administration JT Maxwell


JT Maxwell Limited, Unit 1 Lagan House, 1 Sackville Street, Lisburn, BT27 4AB.

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