“administration is not only for big companies”
Administration can be a constructive way of preserving a company’s business or achieving a better return for creditors than a liquidation. A licensed insolvency practitioner is appointed as administrator on the petition of either the company, the directors or one or more of the company creditors.
Administration immediately offers protection to the business from creditors. During this time the company is protected from creditor action while a long term solution can be sought. Options can include:
Refinancing of the business
Sale of the business to new owners
Splitting the business into saleable divisions
The appointed administrators main responsibility is to get the best return for the business creditors and is appointed by the court.
During this current recession there were many very well known business names that entered into administration. Some went out of existence, others were rescued at various levels. Notable recent names include: JJB Sports, Comet, Woolworths, Game, MFI, Jessops.
Administration is similar to “Chapter 11” in the USA.