Administration is a procedure placing a company or limited liability partnership that is, or is likely to become, insolvent under the control of the administrator following an appointment by either company shareholders, or its directors, or a creditor, or a secured creditor with a floating charge. The purpose of an Administration is the rescue of the company as a going concern, or the achievement of a more advantageous realisation of assets for the benefit of creditors than if the company was placed into liquidation. An Administration must try to achieve the first of these objectives unless the second is more favourable for creditors.
The Administrator takes control of the company ands its assets for the benefit of creditors and presents his proposals to the company’s creditors within eight weeks of being appointed. If approved, the Administrator must implement the agreed plan within one year following appointment, although, by consent, this period can be extended.
An Administrator may, subject to certain requirements, pay dividends directly to creditors, including unsecured creditors, potentially reducing time and costs – returning funds to the worst affected by the insolvency.