|Is an insolvency process which was introduced with the intention of promoting the "rescue" of underperforming Companies, either in full or in part. Administration is intended to facilitate the reorganisation or restructuring of an eligible Company, or to realise its assets under the protection of a statutory moratorium. The moratorium prevents winding up petitions or other legal remedies in relation to debt enforcement from commencing or continuing.
In most, but not all instances, a Company may continue to trade under the control of an Administrator, thus allowing some breathing space for time to attempt a debt restructure of the business, or to sell the business or demerge it into elements that are attractive to interested parties.
The Administrator must perform his functions with the objective of achieving a particular purpose, these are defined as:
| •||To rescue the company on a going concern basis; or|
| •||To achieve a better result for creditors than there would be on Liquidation; or,|
| •||To realise property to make a distribution to secured or preferential creditors of the Company.|
The procedure is managed by an Administrator, who must be an authorised licenced insolvency practitioner, who may be appointed by the court, a floating charge holder, the company or its directors. The Administrator must perform his functions in the interests of the Company's creditors as a whole.
Within eight weeks of the date of an Administration appointment, the Administrator will circulate to all creditors their formal proposals for achieving the particular purpose of the Administration, and to allow creditors to consider and vote upon those proposals. The proposals will also outline the appropriate course required for the Company to exit Administration, either by moving the Company into liquidation, or by proposing a Company Voluntary Arrangement, dissolution, or, if the circumstances allow, even the return of the Company back under the control of its directors if the Company can be returned to solvency.