Company Administration Process Explained
Company Administration Process Explained? The procedure can remain a complicated process to understand.
The procedure, known as a robust fast-acting insolvency process for obtaining control of a company experiencing unmanageable cash flow problems, and potentially insolvent. Once an administration process is agreed to deal with pressing creditor issues, the Court may agree to the appointment of an insolvency practitioner to act as administrator of the failing company. One appointed, a moratorium protects the company ceasing any further or existing legal action.
So then please bear with this process.
Administration process step by step for your company.
Contact HBG Advisory and book a VIRTUAL meeting safe and private in confidence. Please ensure the person in the conference, preferably a director of the company concerned to discuss the company current financial status.
Ensure you review all information and advice
The information examined, requires a review together with proposed experienced advice covering all options given for your ailing company. HBG Advisory will provide a free quote, including our terms of business.
- Our Insolvency Practitioner will explain how to handle company assets, together with matters particular to your company, which is openly talked through robustly.
- The Insolvency Practitioner openly discusses the prickly issue of overdrawn directors loan account. Often brushed under the carpet until the Administrator appoints and request repayment down the line. We believe that you need to understand the implications while arranging a plan to repay. Suppose you think the accounting records of the company to be incorrect? Then ask your accountant to assist, helping the IP to reconsider the account, therefore, removing any contention for all.
REMEMBER: Overdrawn director loan accounts remain a collectable asset of the company just like debtors and assets.
Instigate the formal instruction ensuring a board meeting organised.
Upon the terms reaching an agreement, then a director will formally instruct the practitioner to assist the directors in putting the company into administration. A duly designated board member then is required to sign the administration documents.
File a notice of intention at companies house
When a qualifying floating charge holder registered at Companies House, forms part of the company. Then directors are required to give advance notice of the administration. The agreed acting designated board member then required to provide a statutory declaration on the document using a solicitor.
Appointment of an administrator
Upon the expiry of the period of notice or the charge holder consents, the notice of appointment, then may be filed at the court. A statutory declaration then needs signing by a designated member.
Preparation of Statement of affairs by directors
Once in administration, the Administrator will require you to provide a statement of affairs, detailing the company’s assets and liabilities. Directors frequently prepare the statement in corroboration with their accountant. Upon completion, directors sign the statement, which then is retained by the Administrator and a copy filed at companies house.
Finally, deal with any Post liquidation matters before formal closure.
The IP assist in ensuring the companies records transfer to the order and safekeeping of the appointed Administrator. Further, all company assets remain required to be safeguarded and sold for the benefit of the companies creditors. Once all matters are clear, only then will the company be dissolved or liquidated.
A company may then enter administration via one of the following:
- Court order application by 50% or more of shareholders;
- company directors application for a Court order;
- an application to the court by one or more of the company’s creditors;
- a creditor who has registered a valid qualifying floating charge may appoint.
What Happens once the Administrator is Appointed?
Once an administrator is then appointed: –
- Directors Powers Cease;
- control hands over then to the administrator;
- administrator writes to the companies known creditors, advising of the appointment;
- the administrator reviews the company’s position enabling the best way forward. All Legal action ceases upon administration by creditors while administrator in the office;
- the administrator has eight weeks to determine what to then do with the company. The principal purpose of the administrator is to protect the company as a going concern then. Notwithstanding, if that is not in the best interests of creditors, they will then either:
- realize a more favourable outcome for the company’s creditors, than if the company had not entered administration or ;
- then sell company assets to pay to one or more of the secured or preferential creditors;
- appointed administrator issues a report to all known creditors within eight weeks of appointment. Known as administrators report. It details action by the administrator to date and the strategy moving forward. Also, an initial creditors’ meeting is then required and needs to advise within ten weeks of the time the company entered administration. The administrator is then required to give creditors a minimum of two weeks’ notice of this meeting.
How Long does an “Administration” last?
The process then lasts one year. Though, it may continue with the additional approval of the creditors and the court. The administrator is then required to provide a written report of their progress. All known creditors receive a report every six months.
While appointed, The administrator has powers; therefore, to achieve their goals. These exceed capabilities held by the company directors, who are powerless during this time. The administrator may, however, remove and replace directors.
When Does it Then Come to an End?
An administration comes to an end in the following ways:
- Now up to a one-year time limit. May extend with the agreement of the company’s creditors or the court;
- Purpose of administration achieved;
- Administrator’s ability achieving the intended goal is in doubt. Therefore, the administration ceases by applying to court.
Company Administration Process Explained? What Next?
Once the administration ends, the company:
- Then returns to the directors’ control;
- the company may then enter liquidation;
- enters then into a company voluntary arrangement.
For help on Directors Redundancy, view redundancy
Then meet the HBG Advisory team.