It is an insolvency process that provides protection of the company where there is a prospect of saving the company’s business or providing a better result for creditors than liquidation.
An insolvency practitioner is appointed as administrator to take control of the company. An administrator may be appointed:
- By an order of the court on application by the company, the directors or one or more creditors
- Without a court order by the company, directors or a creditor who holds a qualifying floating charge over the assets of the company.
In most cases, Seneca IP Limited can initiate administration proceeding for a company in a matter of hours, thus giving a company almost immediate protection from creditors.
When appointed, the administrator will liaise with the existing management of the company to formulate an achievable business recovery or restructuring package with the following objectives in mind:
- Rescuing the company as a going concern, or; if that cannot be achieved;
- Achieving a better result for the creditors as a whole, than would be likely if the company were wound up (i.e. liquidated) without first being in administration or; if that cannot be achieved;
- Realising property of the company in order to make a distribution to secured or preferential creditors.
To achieve these objectives, the administrator has the power to carry on the business of the company and realise its assets.
The administrator will prepare a proposal for achieving the objectives of the administration and this will be presented to the creditors for their approval.
At the end of an administration:
- The company may be returned to the control of its directors
- The company may go into liquidation
- The company may be dissolved