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In this procedure the company is placed under the control of an insolvency practitioner and the protection of the court.


The purpose of the administration must be one of the following: -

  1. Rescuing the company as a going concern
  2. Achieving a better result for the creditors as a whole than would be likely if the company were wound up without first being in administration, or
  3. Realising property so as to make a distribution to secured or preferential creditors.

While a company is in administration creditors are prevented from taking any actions against it except with the permission of the administrator or the court.


An administrator may be appointed either by: -
  1. an order of the court, on application by the company, its directors, one or more creditors, or
  2. direct appointment by the company, its directors or a creditor who holds security of a type which qualifies him to make such an appointment.
A secured creditor who is qualified to make an appointment may intervene where the company has made an application to the court. This means that the secured creditor’s choice of administrator will prevail.


An administrator has the power to carry on the company's business and realise its assets. The administrator must prepare proposals for approval by the creditors setting out how he intends to achieve the purpose of administration. There is a one year time limit within which the administration should be concluded, although this period can be extended if more time is needed to achieve the purpose of administration.


On conclusion of the Administration: -
  1. the company may be returned to the control of its directors and management
  2. the company may go into liquidation (CVL)
  3. the company may be dissolved (if there are no funds for distribution to unsecured creditors)
  4. if a voluntary arrangement (CVA) has been agreed during the administration, it may continue.



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