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Insolvency Procedures Series #1 - Administration

7th November 2022


Peter Worrall


Charles Russell Speechlys LLP

What is administration?

  • A procedure allowing for the reorganisation of a company or the realisation of its assets under the protection of a statutory moratorium.
  • Mainly used for insolvent companies.
  • Governed by Schedule B1 of the Insolvency Act 1986 (IA 1986).
  • The administration must aim to achieve one of the following objectives:
    • to rescue the company as a going concern; or
    • to achieve a better result for the creditors than would be likely if the company were wound up; or
    • to realise property to make a distribution to one or more secured or preferential creditors.

Routes into administration

  • By court order, made in an open hearing, upon a formal application to court (the court route); or
  • By the filing of documents at court (the out-of-court route) by:
    • The company.
    • The directors.
    • The holder of a qualifying floating charge.
The administrator owes duties to all the creditors and not to a single creditor as in administrative receivership.Administration often leads to the eventual liquidation of the company, and it may not be possible to secure the sale of the business.
There is a statutory moratorium freezing all actions by the creditors.It can still be a lengthy and costly process.
The out-of-court route to administration is a quick and flexible option. 
Administrators, like liquidators can attack past transactions. 
The business may well be saved, in whole or in part, by sale or hive down (transfer of a business to a subsidiary). 

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