Administration Moratorium

Insolvency

One of the main advantages of administration is the company has the benefit of a moratorium.

What does this mean?

  • Paragraph 42 of Schedule B1 of the Insolvency Act 1986 prevents a resolution being passed to place the company into liquidation or an order being made for the winding up of the company.
  • Paragraph 43 of Schedule B1 of the Insolvency Act 1986 prevents any legal process being commenced against the company without the consent of the Administrator or the permission of the court.

Importantly here, this may allow the company some breathing space, and an opportunity to continue trading whilst seeking a buyer, or simply the opportunity to realise assets for the benefit of creditors. An Administrator is an officer of the Court, and acts as agent of the company.

Once a company is in administration, the Administrator manages the affairs, business and property of the company.

An Administrator has a number of powers (Schedule 1 of the Insolvency Act 1986), which allow the Administrator to perform his duty to act in the company’s creditors as a whole.

For free insolvency advice, please contact Lynn Gibson or one of the team on 01932 336149.

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