Company Administration Lugsdale in Lugsdale

Contact Us

Company administration is a formal insolvency procedure designed to rescue an insolvent company or, if immediate liquidation is impossible, achieve a better outcome for creditors than that. 

The purpose of administration is to protect the company from legal actions. The administrator assesses and manages the company’s affairs, primarily rescuing the company as a going concern.

Company administration is crucial in the UK’s corporate landscape, particularly for businesses grappling with financial distress. 

This legal mechanism offers a lifeline to insolvent companies or those on the brink of insolvency. 

It provides a structured approach to protecting assets, managing liabilities, and potentially reshaping operations to ensure survival. 

Recieve Free Advice

An organisation that demonstrates insolvency could risk being shut down due to financial issues. 

If a business chooses company administration in Lugsdale, it will be appointed by an insolvency practitioner who acts as the administrator. 

The Administration Process in the UK

The Administration process is designed to rescue the company if possible or to achieve a better outcome for creditors than liquidation. 

The administration process in the UK is detailed, from initiation to exit.

Initiation

A company can enter administration when it cannot pay its debts, meaning it is insolvent. The directors can initiate the administration, which can be voluntary or forced by creditors. 

The process begins with filing an application to the court, or in some cases, it can be done out of court through a notice of intention to appoint an administrator.

Roles of Directors and Creditors

Once the company becomes insolvent, directors are responsible for acting in the best interests of creditors. 

Creditors, particularly secured creditors, can trigger administration if they believe it will increase their chances of recovering debts.

Appointment of an Administrator

The court typically appoints an administrator, although in some cases, a qualified insolvency practitioner can be appointed without court involvement. 

The administrator’s role is to take control of the company, assess its financial position, and decide on the best course of action to maximise returns for creditors.

Administrator's Responsibilities and Powers

The administrator has wide-ranging powers, including managing the company’s business, disposing of assets, and negotiating with creditors. 

Their primary duty is to the creditors, ensuring that the process follows the legal framework and aims to achieve the best possible outcome for all stakeholders.

During Administration

The administrator begins by immediately controlling the company’s assets, reviewing financial records, and assessing the business's viability.

They may continue trading the business, restructure operations, or negotiate with creditors to reorganise debt if deemed beneficial.

Exit from Administration

The administration process can conclude in several ways:

  • Restructuring: The company may be restructured, allowing it to exit administration and continue operating under a new financial plan.

  • Sale: The business or its assets may be sold as a whole or partly to repay creditors.

  • Liquidation: If a rescue or sale is not possible, the company may enter liquidation, where its assets are sold, and the proceeds are distributed to creditors.

Creditors are paid based on the priority established by law, with secured creditors typically receiving payments first, followed by unsecured creditors. Shareholders are last in line and often receive nothing if the company’s assets are insufficient.

Get In Touch

How to Appoint an Administrator Lugsdale

Directors can appoint an administrator if they believe it is in the best interests of the company and its creditors. This is often a voluntary step to protect the company from creditors' actions while formulating a rescue plan.

Before appointing an administrator, assessing whether administration is the appropriate course of action is essential.

Administration is typically considered when a company is insolvent or at serious risk of insolvency and when there is a realistic prospect of rescuing it or achieving a better outcome for creditors than immediate liquidation.

Key indicators of insolvency are when a company cannot pay its debts as they fall due or when ongoing legal actions or creditor pressure threaten its operations.

Find Out More

How Does Administration Affect Company Directors?

When a company enters administration, directors lose control over the business. The appointed administrator manages the company to rescue it or maximise returns for creditors. Directors must cooperate fully with the administrator, providing necessary information and access to company records.

Directors remain legally obligated to act in creditors' best interests. They risk personal liability and disqualification from future directorships if found guilty of wrongful or fraudulent trading before administration.

While directors may retain their titles, their authority diminishes significantly. They cannot make operational or financial decisions and must comply with statutory requirements unless the administrator assumes these duties.

Administration can impact directors emotionally and professionally, affecting their reputation and career prospects. After administration, their future role depends on whether the company is rescued, sold, or liquidated.

The Difference Between Administration and Liquidation

Administration aims to rescue or restructure a company to maximise creditor returns. An administrator takes control, manages the company, and explores options to keep it running or sell it as a going concern. If rescue isn't possible, the company may still avoid liquidation.

Liquidation involves closing the company and selling its assets to pay creditors. A liquidator is appointed to oversee the winding-up process, leading to the company's dissolution.

Administration focuses on saving the business, while liquidation focuses on closing it down and settling debts.

What Are The Duties of an Administrator in the UK?

An administrator in the UK has several key duties when managing a company in administration:

  1. Rescue the Company: The primary duty is to try to rescue the company as a going concern, ensuring it can continue to operate and avoid liquidation.

  2. Maximise Creditor Returns: If rescuing the company is not feasible, the administrator must work to achieve a better outcome for creditors than would be possible through liquidation.

  3. Manage Company Affairs: The administrator takes control of the company, managing its assets, operations, and financial affairs to protect and preserve value.

  4. Secure Assets: The administrator must secure and protect the company’s assets from depreciation or unauthorised actions.

  5. Communicate with Stakeholders: The administrator must keep creditors, employees, and other stakeholders informed about the administration process and any decisions made.

  6. Distribute Funds: If the company is sold or assets are liquidated, the administrator is responsible for distributing the proceeds to creditors in accordance with legal priorities.

  7. Comply with Legal Obligations: The administrator must adhere to all relevant UK insolvency laws, including filing necessary documents with the court and Companies House.

These duties ensure that the administrator manages the company effectively during the administration process to maximise returns for creditors and, if possible, save the business.

Costs Associated with Company Administration

The costs of company administration in the UK typically include:

  • Administrator’s Fees: Administrators charge hourly rates, usually between £200 and £600 per hour, depending on complexity and their experience.

  • Legal Costs: Legal fees range from £10,000 to £50,000, depending on the case's complexity.

  • Disbursements: Expect additional expenses for travel, asset valuation, and advertising, typically adding £5,000 to £10,000.

  • Employee Costs: Continuing operations may require paying wages and redundancy, which can vary widely based on the company size.

  • Asset Management Costs: Securing and selling assets usually range from £5,000 to £20,000.

  • Final Reporting: Final reports and closure preparation might cost around £2,000 to £5,000.

Administration costs usually exceed £50,000, depending on the case's specifics.

Get A Price For Administration

How does company administration impact employees?

During administration, employees' contracts generally remain in place. The administrator can decide whether to retain or dismiss employees based on the company's circumstances and recovery strategy.

Employees are considered preferential creditors, meaning their wages, holiday pay, and other benefits are prioritised in the administration process. However, any arrears owed to employees beyond a specified amount may not be fully covered.

Can a company continue trading during administration?

A company can continue trading during administration if the administrator believes it is in the best interest of the creditors.

This can help preserve the business's value, maintain customer relationships, and potentially lead to a more favourable outcome, such as selling the business as a going concern.

The administrator oversees trading operations, ensuring they are financially viable. Risks include the potential for further financial losses, which the administrator must carefully manage to avoid worsening the company's financial situation.

What happens to contracts and leases during administration?

Contracts are not automatically terminated during administration.

The administrator can choose to continue, renegotiate, or terminate contracts based on the best interests of the creditors and the recovery plan.

The administrator similarly handles leases. If the lease benefits the company, the administrator may continue it; otherwise, they may negotiate with landlords to terminate or amend the lease terms.

What happens if the administration is unsuccessful?

If the administration process does not lead to the recovery or sale of the business, the company will typically proceed to liquidation. In this case, the administrator will shift roles to liquidate assets, pay creditors, and dissolve the company.

This often means reduced recoveries for creditors, as assets are sold off piecemeal. For employees, it typically results in job losses and claims for unpaid wages through liquidation.

How does administration affect company shareholders?

During administration, shareholders generally have limited influence, as the administrator acts in the interest of creditors. Shareholders may be consulted during the process, but their control over company decisions is minimal.

The value of shares typically declines significantly, and shareholders may lose their entire investment if the company is liquidated or sold at a loss.

How is the outcome of the administration process determined?

The outcome depends on the company’s financial health, the potential for restructuring, and the interests of the creditors.

The administrator assesses these factors to determine whether to restructure, sell, or liquidate the company.

The administrator must balance the interests of secured creditors, unsecured creditors, employees, and shareholders to achieve the best possible outcome for all parties involved.

How long does a company stay in administration?

Administration usually lasts up to 12 months, but this period can be extended with the creditors' or the court's consent.

If the administration needs to be extended beyond 12 months, the administrator must seek approval from the creditors or apply to the court for an extension, explaining the reasons for the delay.

What is the role of the court in company administration?

The court plays a crucial role in the administration process, particularly in appointing administrators, approving certain decisions, and resolving disputes.

The process usually begins with a court application to appoint an administrator. Subsequent legal proceedings may involve court hearings to address creditor disputes, approve the sale of assets, or extend the administration period.

How are unsecured creditors treated during administration?

Unsecured creditors are typically lower in the repayment hierarchy than secured creditors and employees. Depending on the company's asset realisation, they may receive only a portion of their debts.

While unsecured creditors can file claims, the amount they recover depends on the available assets after secured creditors and preferential creditors have been paid.

What happens to directors' personal guarantees during administration?

If directors have provided personal guarantees for company debts, creditors can still pursue these guarantees during administration. The directors may be personally liable for the guaranteed amounts.

Directors must carefully assess the risk of personal guarantees, as they can significantly impact their finances if the company enters administration and cannot meet its obligations.

Can company administration be challenged or reversed?

Creditors or other stakeholders may challenge the administration process if they believe the administrator is not acting in their best interest. Challenges typically involve court applications to review the administrator’s decisions.

It is rare, but possible, to reverse the decision to enter administration, particularly if the company’s financial situation improves unexpectedly or if there was a procedural error in the administration appointment. This would require a court application and strong justification.

What are the success rates of company administration in the UK?

The success of company administration varies depending on the industry, the company’s financial health, and market conditions.

Administration can successfully restructure or sell businesses, but not all companies are saved.

Studies and industry reports suggest that while some companies successfully emerge from administration, many ultimately proceed to liquidation, especially if the administration was initiated too late or if the market conditions are unfavourable.

What are the alternatives to company administration?

  • Company Voluntary Arrangements (CVAs): A CVA allows a company to agree with its creditors to pay off debts over time while continuing operations. This option is often less disruptive than administration.

  • Pre-Pack Administration: In a pre-pack administration, the sale of the company's assets or business is arranged before the company enters administration, allowing for a swift transfer of ownership and operations.

  • Liquidation: If the company cannot be saved, creditors might opt for liquidation, in which the company’s assets are sold to pay off debts and subsequently dissolved.

Contact Our Team

We cover Lugsdale (Cheshire)

Get in touch

We aim to get back to you in 1 working day.


Skip to

Gallery

Other locations available for company administration lugsdale
Sydney Hockley Wincle Wheelock Hooton Hartford Whitbyheath Sound Heath Budworth Heath Wood Lanes Halton Brook Sutton Weaver Town Fields Mouldsworth Booths Hill Newtonia Little Bollington Frandley Churton Little Sutton Cross o' th' Hill Higher Hurdsfield Lymm Somerford Macclesfield Forest Farnworth Handbridge Hulme Walfield Clutton Eaton Withington Green Onston Daresbury Delph Calveley Marley Green Danebridge Eaton Hall Hollins Green Padgate Birchall Moss Henbury Hermitage Green Outlet Village Feldy Beechwood Weston Newtown Wybunbury Harden Park Gorstella Balterley Heath Sound Kingsley Swanbach Monk's Heath Bell o' th' Hill Frodsham Westbrook Over Tabley Clive Lowcross Hill Weetwood Common Clive Green Buerton Moss Hillcliffe Cuddington Congleton Prince Hill Coddington Doe Green Stowford Hoo Green Whatcroft Walley's Green Moss Bank Heath Styal Thorns Green Fulshaw Park Chorlton Little Stanney Heatley Brassey Green Park View Collins Green Tytherington Norbury Town Park Great Warford Rainow Marton Ebnal Wolverham Barnhill Haslington Peckforton Greenlooms Alsager Hetherson Green The Brow Darnhall Smallwood Norcott Brook Lugsdale Longmoss Cloud Side Puddington Runcorn Walgherton Hope Green Windle Hill Backford Cross Cuckoo's Nest Bickleywood Newsbank Oldcastle Heath Risley Bickerton Willington Corner Kingswood Middlewood Cross Town Swanley Church Minshull Hampton Heath Poynton Woodworth Green Clotton Byley Rixton Boughton Heath Rowton Latchford Swettenham Heath Arthill Bradwall Green The Valley Aldford Dee Banks Styal Cross Wrenbury-cum-Frith Chorley Sandbach Heath Ridley Paddockhill Snelson Lunts Heath Crewe Green Delamere Kemincham Abbot's Mead Higher Disley Bulkeley Fourlanes End Lower Peover Hodgehill Morley Picton Spenmoss Ginclough Appleton Thorn Beeston-brook Locking Stumps Lea Forge Noonsun Lostock Green Hebden Green Hurdsfield Huxley Astmoor Birchwood Ashley Brownlow Lane End Poulton Great Sutton Bradley Mount Lower Walton The Bank Marsh Green Weston Stretton Church Lawton Oakmere Ness Piper's Ash Aston Over Knutsford Brownlow Heath Radmore Green North Rode Rhuddall Heath Rostherne Warren Burleydam Clark Green Coxbank Hargrave Skellorn Green Upton Heath Mollington Blackbrook Oakhanger Bunbury Christleton Barbridge Abbot's Meads Penketh Bollington Cross Widnes Sandymoor Fuller's Moor Occlestone Green Lower Stretton Burland Weaverham Calrofold Wright's green Upton Swan Green Marshfield Bank Astbury Lindow End Puddinglake Marston West Bank Mottram St Andrew Dunham-on-the-Hill Elworth Dodleston Willaston Wilkesley Stoneley Green Martin's Moss Burtonwood Crabtree Green Malkin's Bank Little Town Mickle Trafford Lower Whitley Walker Barn Moulton Brickhouses Great Barrow Larden Green Lowerhouse Gravel Rodeheath Butt Green Burton Hallowsgate Winterley Stenhills Hoole Bank Disley Lostock Gralam Stamford Bridge Ravensmoor Wardsend Key Green Neston Appleton Rainowlow Tilstone Fearnall Marton Green Wilderspool Kingsway Maw Green Hartfordbeach Malpas Gemini Wettenhall Green Newtown Tabley Hill Mere Bruche Stoke Bank Bruera Broken Cross Westminster Park Sutton Lane Ends Lower House Bottom-of-the-Oven Rocksavage Hinderton Burford Foxwist Green Haughton Minshull Vernon Wornish Nook Nova Scotia Lower Pexhill Diggle Green Utkinton Spen Green Hollowmoor Heath Arley Keckwick Mow Cop Eccleston Lower Heath Aldersey Green Hough Green Wardle Bank Higher Bunbury Hunsterson Moblake Grange Stonyford Elton Oakwood Woodbank Shocklach Gurnett Radway Green Antrobus Marton Norton Upper Threapwood Broomhill Jodrell Bank Barrows Green Burton Barthomley Tarvin Shavington Saughall Goostrey Chowley Hale Capenhurst Way's Green Holmes Chapel Twemlow Green Higher Wych Chelford Buckoak Longhill Orchard Park Northwich Gorse Covert Upton Rocks Glazebrook Davenham Rode Heath Birchwood Centre Willaston New Mills Appleton Park Newtown Somerford Booths Fearnhead Blakenhall Gleadmoss Pott Shrigley Illidge Green Chapel End Sankey Bridges Croft Warmingham Four Lane Ends Haymoor Green Adlington Woolston Ditton Stanthorne Moston Green Parkgate Prestbury Rowton Moor Castletown Wildboarclough Wirswall Duckington Hankelow Plemstall Tilston Audlem Crewe-by-Farndon Ball o' Ditton Howley Clannor Heath Stockton Heath Over Merelake Whiteley Green Little Heath Adder's Moss Threapwood Whisterfield Sandiway Bickley Moss Hulme Siddington Heath Yatehouse Green Whitby Moston Lane Ends Hough Bunsley Bank Bridgemere Dale Brow Kingsmead Birchwood Park Dutton Lyme Green Hoole Quoisley Brown Moss Clotton Common Fanshawe Croxton Green Aston Higherfence Crowton Longbarn Lacey Green Bickley Town Wardle Booth Bank Lower Carden Burwardsley Morley Green Moss Lane Coppenhall Moss Worleston Newton Dones Green Glazebury Ince Whitley Reed Tilstone Bank Gleadsmoss Ledsham Anderton Simm's Cross Faddiley Winwick Hightown Winnington Lingley Mere Houghton Green Betchton Heath Newhall Spurstow Lightwood Green Pinsley Green Higher Whitley Curzon Park Bewsey Edge Green Bradwall Hampton Green Wells Green Coppenhall Slaughter Hill Sutton Green Barnett Brook Hood Manor Tattenhall Great Budworth Horton Green Vicarscross Childer Thornton West Bank Dock Estate Fowley Common Ashton Hayes Cholmondeston Windmill Hill Croughton Thurlwood Newton Whitecross Alpraham Rease Heath Higher Burwardsley Salterswall Moss Houses Manor Park Stapeley Wervin Oughtrington Ness Holt Waverton Moore Kidnal Astbury Marsh Plumley Westfield Allostock Gawsworth Higher Marston Wimbolds Trafford Hob Hill Newtown Statham Radnor Rudheath Weston Halton View Harthill Hand Green Wilmslow Park Whitehouse Lea Green Macclesfield Howbeck Bank Milton Green Highlane Wood Head Bridge Trafford No Man's Heath Basford Boughton Brookvale Wigshaw Ruloe Gallantry Bank Arclid Brindley Brereton Heath Pot Bank Higher Walton Rushgreen Aldersey Park Kelsall Kerridge-end Kettleshulme Arclid Green Davenport Green Hassall Dallam Duddon Oakgrove Woolfall Midway Meadowbank Fivecrosses Cross Lane Beeston Kingswood Egerton Green Lingley Green Barrets Green Martinscroft Saighton Stoak Lach Dennis Ellesmere Port New Pale Tarporley Little Leigh Hapsford Hatton Heath Bunbury Commons Bucklow Hill Upton Two Mills Bradfield Green Wistaston Green Wimboldsley Hatton Daresbury Marthall Hulseheath Rudheath Woods Bostock Green Havannah Mere Heath Blackden Heath Preston on the Hill Hollyhurst Over Peover Norton Cross Cinnamon Brow Eaton Hilltop Englesea-brook Bunbury Heath Grange Bosley Ackers Crossing Hack Green Palace Fields Broomhall Green Cranage Boothsdale Scholar Green Crewe Grappenhall Broomedge Helsby Westy Duddon Heath Halton Lea Little Barrow Ettiley Heath Alderley Edge Guilden Sutton Dean Row Handforth Lower Bunbury Stud Green Cuerdley Cross Blakelow Wrenbury Heath Pownall Park Clifton Callands Bate Heath Cooksongreen Culcheth Chester Row-of-trees Knolls Green Balderton Wades Green Langley Blacon Pulford Broken Cross Checkley Green Alvanley Hough Butley Town Grange Lea by Backford Sandbach Hallwood Park Davenport Broxton Nether Alderley Dane in Shaw Higher Carden Twiss Green Pickmere Shotwick Wharton Green Royal's Green Lower Withington Barnton Moorside Manley Wheelock Heath Littler Moss End Wilmslow Bartington Danebank Mossend Crow Wood Preston Brook Barton Little Warford Wistaston Danes Moss Aston juxta Mondrum Checkley Hunsterson Four Lane End Allgreave Higher Wincham New Lane End Winwick Quay Sproston Green Buerton Brownedge Brookhouse Green Overton Acton Brookhouse Bradeley Green Moss Side Dudlow's Green Bradley Green Daleford West Heath Overpool Leftwich Cobbs Gibb Hill Shaw Heath Caldecott Green Nantwich Lower Kinnerton Greenbank Smethwick Green Lache Arley Green Lane Ends Booth Green Warrington Old Hall Brown's Bank Gorstage Handley Cold Moss Heath Bath Vale Bache Barrow's Green Aston Heath Birch Heath Lawton-gate Comberbach Swanwick Green Littleton Stanlow Whitegate Kerridge Buglawton Deansgreen Norbury Common Sowcar Halton Village Stretton Mossley Kenyon High Legh Bank Quay Woolstanwood Elton Green Mobberley Sworton Heath Roughhill Thelwall Lawton Heath End Hollinfare Gauntons Bank Lawton Heath Smith's Green Higher Shurlach Kermincham Heath Wettenhall Snow Hill Hale Bank Saltney Bollington Little Budworth Farndon Norley Weston Point Pewterspear Milners Heath Ollerton Belgrave Newton Greendale Hatherton Rushton Huntington Paddington Chorlton Lane Peover Heath Brown Knowl Castlefields Sandlow Green Duddon Common Backford Day Green Thornton-le-Moors Hollinsgreen Manor Park Dukesfield Swettenham Higher Runcorn Tarvin Sands Kinsey Heath Higher Poynton Boots Green Hoofield Wharton Knutsford Holtridge Finney Green Cotebrook Gatesheath Wincham Oscroft Little Neston Siddington Smithy Green Bickley Whirley Grove Barrowmore Estate Marbury Shell Green Woodhey Green Hatchmere Brereton Green Netherton Bradley Newtown Tatton Dale Great Sankey Moston Winsford Shocklach Green Longford Murdishaw Church Green Cuddington Heath Hassall Green Acton Bridge Timbersbrook Manley Common Red Bull Middlewich Tiverton