Administration

Question 1

What is an administration ?

Answer 1

The situation where a company having solvency problems is placed in the hands of Administrator appointed by the court,
the administration pocess helps to protect the business and will try to return it to solvency

Question 2

Processes - Administration

Answer 2

1) The company via a majority of shareholders, the directors , a creditor, or any combination of them may apply to the
court for an administration order
2) Individual shareholders can’t make an application
3) No enforcement of retention of title clauses or no resolution
Or court order to wind up the company
4) Courts must be satisfiedtthe administration has a chance
of achieving its aims
5) Administrator must be qualified insolvency practitioner

Question 3

Advantages of Administration

Answer 3

For companies:
1) it provides temporary breathing space to make a rescue plan
2) The business can continue to exist
3) The administrator maybe were willing to take the difficult
decisions needed to save the business

For shareholders:
1) if the administration is successful, the share value and
income should recover

For Creditors:
1) the process shoull achieve a better outcome for the creditors
2) Creditors can have continued business relations with the company once it has turned is fortunes around

Question 4

Disadvantages of Administration

Answer 4

For Creditors
1) Some individual Creditors ( those with security or retention of title clauses ) may be disadvantaged