Administration
The process of administration can be an effective tool for companies in financial distress, with the potential to rescue the company.
What is administration?
A key benefit of administration is that is provides the company with a period of reprieve – known as a ‘moratorium’ – from any action in relation to creditors’ claims, whilst it takes stock and considers its options. The ‘moratorium’ can be obtained by filing a notice at the court (usually the High Court) which is known as a “Notice of Intention to Appoint Administrators” or by making an application to court for an administration order. Once filed, this gives the company the protection of the moratorium for up to 10 business days and means no creditors can take any action against the company or its property without the permission of the court. A second notice, known as a “Notice of "Appointment”, can be filed before the 10 business days are up, which formally places the company into administration. This effectively gives the company some breathing space. Successfully navigating an administration takes a high level of expertise, which is exactly what our experienced team can offer.
Whether the decision for a company to enter administration has been taken by its directors, shareholders or creditors, we can provide clear advice and practical support to give you the best chance of getting the outcome you want to achieve.
Administration involves handing over control of the company to an independent licensed insolvency practitioner, appointed as an administrator. This is, understandably, a scary thought for business owners, which is why having the right advice and support is essential.
Our experienced solicitors can help with various scenarios, providing expert advice and guidance on administration and company rescue in general, as well as on the various possible outcomes of an administration, including:
- Company Voluntary Arrangements (‘CVAs’)
- Sale of the company as a going concern
- Sale of the company’s business or assets via a ‘pre-pack’ administration
- Sale of the company’s assets via a Voluntary Liquidation
- Closure of the company
For those involved, facing administration, or dealing with a company in financial distress, can be a very daunting prospect but no matter how challenging the situation, our team are here to offer clear, practical guidance and close personal support so you can achieve the best possible outcome.
Need expert company administration advice? You can contact your local Isadore Goldman office in London, Norwich or Portsmouth or email info@isadoregoldman.com
Why choose us?
Independently recognised expertise
Our experienced solicitors are acknowledged experts who have achieved consistent recognition in leading client guides Chambers & Partners and the Legal 500.
Expertise in a wide range of company administration scenarios
Understanding the circumstances leading to the company’s administration, and what you hope to achieve, is central to getting the best possible outcome. Having worked on all manner of administration scenarios over the years, we can provide seasoned expertise in even the most complex situations.
Clear, realistic advice you can trust
We can remove a lot of stress and uncertainty from an administration scenario by giving sensible advice in plain English on exactly where you are and what you need to do. We will always provide transparent, upfront advice on the likely costs involved, including our fees.
Additional business legal services to meet all of your needs
Our sister business Isadores is a modern commercial practice servicing a diverse range of business sectors. Their additional expertise can add significant value when restructuring or selling your business or disposing of its assets.
Company administration scenarios with which we can assist
Placing the Company into administration
There are a number of routes into administration, which we can explain, but essentially such step can be taken by the company, its directors or a secured creditor (usually a bank or other lender). Except in complex cases, an administration typically lasts for a year, although that period can be extended.
Administration and business rescue
The primary goal of administration is to rescue the company as a going concern. If it is achieved, the administrators hand control of the company back to the directors and the administration comes to an end.
However, administration may not be the only rescue option available. We can talk you through the various options, which may include:
- Debt restructuring
- Operational restructuring
- Demergers (separating profitable from unprofitable parts of a business)
Our solicitors are highly experienced in working with business owners and directors to find intelligent and creative ways to turn companies around, protecting their value for shareholders, while safeguarding the rights of creditors.
We will always be realistic about whether a company can be saved, and help you to make the right decisions at the right times, to protect your interests and meet your legal responsibilities.
If a company is placed into administration, the administrator will also explore various outcomes, in line with achieving the purpose of the administration. These may include the following.
Company Voluntary Arrangements (‘CVAs’)
CVAs are a way for a company to enter into an agreement with its creditors to repay them over a fixed period of time. This can allow the company to keep trading and is often an exit route from administration.
Our team can help to ensure you fully understand the terms of a CVA and the impact it will have on the company in administration and your interests. Where appropriate, we can liaise with the administrator with a view to helping ensure you achieve favourable terms.
Sale of the company as a going concern
Where the company is considered to have a viable future, it may be possible to sell it as a going concern. This can allow the shareholders to receive the maximum value for their investment, as well as protecting the company’s business and its employees.
Selling a financially distressed company as a going concern can be very challenging and will often involve restructuring and other reconfigurations of the company. Our team can advise you on the processes involved and whether this is likely to offer the best option for the company, its shareholders, employees and creditors.
Sale of the company’s business and assets via a ‘pre-pack’ administration
A pre-packaged administration (usually referred to as a ‘pre-pack’) is where the company’s business and/or assets are sold immediately after the company enters into administration. The creditors will normally not be notified until after the sale has taken place.
Typically, a pre-pack sale involves the company’s directors forming a new company (usually called a ‘newco’) to buy the company’s business. They will need to negotiate terms with the administrator. The usual practice is that the company’s business and/or assets will be marketed for sale on the open market before a sale to the newco or any interested party can be agreed.
If the interested buyer is able to agree terms with the administrator, these will need to be formalised in a sale and purchase agreement (‘SPA’).
Our company administration solicitors can advise company directors on matters including:
- Formation of a newco;
- Negotiating with the administrator to buy the company’s business and/or assets and terms of payment; and
- Sale and purchase agreements and any ancillary documents.
We can also provide general commercial law advice to the newco through our sister brand Isadores.
Sale of the company assets via a Liquidation
If the administrator is unable to save the company, it will likely be necessary to sell its assets in order to repay as much as possible to the company’s creditors. This will usually be done via a liquidation.
We can advise on the effects and the impact on the company’s shareholders, directors, employees and creditors, helping you to make the right strategic choice for your circumstances and key concerns.
Closure of the company
Where the outcome of administration is that a company needs to be closed down and dissolved, its directors, shareholders and creditors will all need to understand their legal rights and responsibilities and how this impacts them.
We can provide clear, experienced advice on what you need to do and the issues you may need to consider for the future, limiting the potential damage the closure of a company can cause.
Consult our experienced solicitors
For clear, practical advice on dealing with a company administration, please speak to our expert team in London, Portsmouth or Norwich.