09/11/2015 – As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions.
As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions, the UK being one of them. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – an alternative to liquidation – is often known as “going into administration”.
A company in administration is operated by the administrator (as interim chief executive) on behalf of the creditors as a going concern while options are sought short of liquidation. In UK law, the administration regime is governed by the Insolvency Act 1986, as amended by the Enterprise Act 2002.
An “administrator” can be appointed without petitioning the court by the holder of a floating charge (created since 15 September 2003), by the company or by its directors. Other creditors must petition the court to appoint an administrator. The administrator must act in the interests of all the creditors and attempt to rescue the company as a going concern.
Appointing administrators may seem easy, and mainly a form filling exercise. However, there are many issues to consider to ensure that the appointment is valid. This issue is of crucial importance as the consequences of an appointment being invalid are dire.
Whether or not an administrator has been validly appointed is an issue is of such importance that many insolvency practitioners now seek confirmation from an independent solicitor post appointment that an administrator’s appointment is valid.
Coyle White Devine have the technical expertise to ensure that appointments are valid and can assist companies going through financial difficulties to take the first step towards finding a solution. Contact Jackie Revell for further advice and information.