Benefits of Administration

• Offers full legal protection from all creditors whilst a strategy is formulated in respect of the future of the company
• Gives directors or third parties an opportunity to buy back the business as a going concern
• Offers vital breathing space whilst a business recovery or restructuring package is implemented
• An administrator can be appointed very easily merely by filing the necessary documentation in court.

The idea of administration is to act as an alternative to winding up so that where possible the company or at least its business can be rescued.  An administrator has the power to trade, manage and sell the business as a going concern in order to maximise the return to creditors.

Administration can be initiated by both directors and qualifying floating charge holders (such as creditors that have a debenture over company assets) but is only viable if the business can be rescued as a going concern or if a better result can be achieved for creditors than would be the case if it was wound up.