Placing a company into administration is applicable for companies whereby one of the following objectives, in the view of an Insolvency Practitioner, can be achieved;
- Rescuing the company as a going concern, or
- 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
- Realising property in order to make a distribution to one or more secured or preferential creditors.
Upon being placed into Administration the company may continue to trade under the direction of the Administrator. Under certain circumstances a company may be sold in pre packaged sale “pre pack” upon being placed into Administration. Through a Pre Pack the goodwill of a company can be preserved which may result in a higher value being obtained for a company’s assets and business. Potentially this will maximise the return to a company’s creditors.
Key Benefits
- Upon entering Administration a legal moratorium becomes effective. No legal action can continue against the company unless authorised by the Court or the Administrator
- A company can be placed into Administration by its directors, shareholders and any qualifying floating charge holder.
- A company can be placed into Administration promptly by its directors in an out of court process.
Administrative Receivership
Under the Enterprise Act 2002 a floating charge holder can only appoint a receiver if their charge was created prior to 15 September 2003 and the business is in breach of their charge, that is the charge has crystallised. As a result placing a company into Administration is now more commonplace. However this particular procedure does have a number of advantages to the charge holders which Parker Getty can accordingly advise them upon.
Law of Property Act “LPA” Receiverships
Under the Law and Property Act 1925 a secured lender has the power to appoint a receiver over property subject to a mortgage charge. This power arises where there has been a default in repayment of a loan of three months or interest has not been paid for two months or where there has been a breach of the deed. Parker Getty can act as a receiver working closely with a network of quantity surveyors, developers to devise and implement commercial solutions for secured lenders.
