What is an administration order?

Insolvency

Administration orders are granted by the court. The process for obtaining one can be “out of court”, where the company or directors or a qualifying floating charge holder take steps to appoint an Administrator by filing an application, without the need for an actual court hearing.

There is also an option to make an application to court, an application is filed, and the court seals the application and fixes a date for a hearing of the application. An application can be made by:

  • One or more creditors of the company
  • the company
  • the directors of the company

On hearing the application, the court will decide whether or not to make the administration order.

An administration order is the commencement of administration. Once an order has been granted the company is “in administration”, and from that date will benefit from the protection that offers.

An Administrator must perform his functions with the objective of:
(a) rescuing the company as a going concern, or
(b) achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration), or
(c) realising property in order to make a distribution to one or more secured or preferential creditors.

The purpose of an administration is to achieve one of the objectives above, seeking first to achieve the rescue of the company.

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

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