Voluntary Administration
A procedure where an independent administrator takes control of a financially distressed company to find the best outcome for creditors.
Purpose of administration
Voluntary administration is designed to give a struggling company breathing space while an independent administrator assesses its position. The aim is to maximise the chance of the business, or as much of it as possible, continuing, or if that is not possible, to produce a better return for creditors than an immediate liquidation would. It is often a faster, more flexible alternative to going straight into a winding up.
How it unfolds
During administration, certain claims against the company are generally put on hold while the administrator reviews the business and reports to creditors. Creditors then usually decide the company's future, which may include returning it to the directors, entering a deed of company arrangement, or moving to liquidation. This is general information only and not legal or financial advice. If you are a creditor of a company in administration, you can refer a debt for guidance.
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