Week 12 - Insolvency - Administration

Question 1

What is the first reason administration is preferable to liquidation?

Answer 1

• The company does not necessarily cease to exist
• Company has time to form rescue plan - temporary relief
• Satisfies creditors to a point as they may have had some payment

Question 2

What is the second reason administration is preferable to liquidation?

Answer 2

• Members still get to keep shares in company
• If administration is successful, they can regenerate business and possibly become stronger than before

Question 3

What is the third reason administration is preferable to liquidation?

Answer 3

• creditors want a return in relation to their past debts
• can apply to a court in administration and get some money back

Question 4

What can you do if you are a floating charge holder?

Answer 4

Request that an administrator is appointed in order to make sure your investment is protected