Going into Administration

What Does Going Into Administration Mean?

We have usually heard in the retail industry that a failing business has gone into administration. But when a company is going into administration, what does that mean and what does the process involve? To know the answers, read this blog till the end! So, let’s start!


We are here to help you with any problem regarding company administration! Do not hesitate to contact us!


What Does Going into Administration Mean?  

It means that the control of the respective company is handed over to a licensed insolvency practitioner that will serve as the administrator. It is their responsibility to look into various possibilities available to save the company. So, that it can pay back its creditors and keep on trading.

The administration is an insolvency process for the companies that are insolvent (means the companies that can’t afford to pay off their debts). It is often a saving grace for them but not always. So, it is better to avoid it.

However, based on the company’s financial status, it may not be in the creditors’ best interests to rescue the company. Therefore, the administration may decide to shut down the company in such a scenario.


Who has the Authority to put a Company into Administration?

It can be put by the respective company owners and its creditors. The owners will utilise the administration process in order to secure the company. 

In case the secured creditors are owed money by the company, they can force that company to go into administration.

With the help of the insolvency practitioner, the company owners can quickly hire an administrator. In order to do this, a fax with the appropriate forms can be sent to the court. This process is simple and does not necessitate a court order.

However, a court order is required for creditors to hire an administrator. As per court orders, the administrator has to act in the best interests of all creditors. And, also mandates that the administrator can not favour any one creditor over another.


To take the pressure off your shoulders and to make the process easy, contact our small business accountants for help!


How Long Does Going into Administration Take?

The process can take anything from some hours to many weeks, depending on your company’s size and situation. 

When the process starts, it lasts for twelve months; however, it may be prolonged with the courts’ permission. For this time period, the administrator would not run the company. It would only run for about six weeks.


What is the Purpose of Administration?

Its purpose is to:

Purpose of Administration

  • Achieve a better return for the creditors than if the company had been liquidated.
  • Repay one or more secured or preferential creditors.
  • Save the company as a going concern so that it can keep on trade

Quick Sum Up

We hope now you have understood what does going into administration means. So, we would conclude our blog by saying that it is better to take appropriate measures after knowing your company is insolvent. In this way, you can save your company by going into administration.


Reach out to us now if you need help with any problem related to company administration! We will assess your company situation accurately and assist in the development of an appropriate course of action! So, feel free to contact us!


Disclaimer: This blog provides information about a company.


Leave a Comment

Your email address will not be published. Required fields are marked *