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This process is designed to hold a business together
whilst its directors, with the expert help of an insolvency
practitioner, decide whether or not the business can
survive or whether its business and assets can be sold
to produce a better result for creditors. The process
is less complicated now with the recent introduction
of the Enterprise Act 2002.
The most important thing to remember about this type
of insolvency is that once the administration order
is in place, the business is protected from creditors
who might threaten to wind up the company.
A company can go into administration in a number of
ways:
- The company, directors, or one or more secured or
unsecured creditors can make an application to court
for an administration. However, it is often difficult
for an unsecured creditor to bring about this action
as the court is unlikely to appoint without adequate
information, which may be difficult for the creditor
to obtain. A creditor will never be able to have a
total picture on the company’s finances and will therefore
be reliant upon his own experience in these matters.
- The directors or a floating chargeholder can appoint
their own administrator without a court hearing, by
filing papers at court which are not subject to judicial
scrutiny.
If you would like to know more about this process
please click on to our brochure
series and download our Administration brochure.
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