Company Administration Lugg Green in Lugg Green

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 Lugg Green, 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 Lugg Green

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 Lugg Green (Herefordshire)

Get in touch

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


Skip to

Gallery

Other locations available for company administration lugg green
Lower Buckenhill Overross Westfield Weston under Penyard Dormington Blackmarstone Bromsash Grantsfield Pen-allt Moccas Hill Gate Claytons Shucknall Bradlow Putley Mordiford Evesbatch Combe Moor Munderfield Stocks Wylde Kimbolton Rowlestone Staplow Brookfield Kivernoll Shelwick Kentchurch Stony Cross How Caple Shobdon Pict's Cross Winnal Common Peterchurch Walker's Green Broad Oak The Knapp Munsley Kington Dulas Canon Pyon Winforton Panks Bridge Upper Marston Stockton Stoneyard Green Canon Frome Foxley Priory Wood Wormbridge Linton Amberley Allensmore Phocle Green Venn's Green Walford Holywell Carey Rowland's Green St Margarets Leysters Pole Ivington Bicton Treaddow Longtown Monmarsh Headbrook Leysters Pool Head Howle Hill Rhydspence Titley Dorstone Bromyard Eign Hill Trolway Bishopstone The Marsh Much Dewchurch Sellack Boat Dilwyn Hildersley Loxter Haven Eau Withington Leys Hill Woolhope Brierley Kerry's Gate St Owen's Cross Linley Green Uphampton Rotherwas Lucton Streamford Moorhampton Millhalf Aston Ingham The Vauld Poolpardon Lower Wootton Clodock Ganarew Lower Green Hampton Bishop Portway Netherton Eardisland New Street Headland Weston Old Country Rodd Hurst Limebrook Upcott Common Hill Sapey Bridge Symonds Yat West Arrow Green Norton Canon Three Ashes Lugg Green The Moors Clouds Yarsop Ongar Street Birchall Byford Lewis Wych Upper Breinton Ladyridge Callowside Lower Grove Common Birchend Prior's Frome Michaelchurch Escley Moreton Jeffries Hill Hole Broadmoor Common Penguithal Lower Egleton Burley Gate Cophill Stansbatch Penrhos Llanwarne Alder's End Sutton St Michael Crossway Little Tarrington Bullinghope Risbury Lower Welson Weirend Upper Sapey Westhide Mortimer's Cross Hunderton Woolhope Cockshoot Monkland Clehonger Wormsley Stowe Lea Line Ebnall Eastnor Lower Southfield Kinton Ewyas Harold Leintwardine Stony Cross Red Rail Ullingswick Castle Frome Upper Grove Common Upper Wootton Middleton on the Hill Munsley Green Crocker's Ash Tillington Common Little Hill Larport Franklands Gate Hope Mansell Hereford Enmore Field Cockyard Ballingham Old Forge Cradley Orcop Swainshill Fiddler's Green Stretton Grandison Hales Wood Newton Archenfield Westfields Five Bridges Much Cowarne Lower Lye Easthampton Newtown Merbach Marden Byton Hand Crumpton Hill Ryelands Leinthall Starkes Lyne Down Calver Hill Walford Newton Newtown Whitchurch Welsh Newton Common Norbridge Hopley's Green Mathon Elton Shawl West Hill Checkley Didley Adforton Tretire The Forge Saffron's Cross Upper Wellington Kilpeck Upper Hardwick Walterstone Three Crosses Poolmill White Rocks King's Acre Fine Street Pipe Aston Breinton Common Tupsley Hinton Ailscroft Marlbrook Brockhampton Newton Steen's Bridge Holmer Dinedor Camp Tyberton Glewstone Leominster Ludstock Sollers Dilwyn Aylestone Hill Burcher Eastwood Marston Gilfach Wellington Heath Michaelchurch Stockingfield Rudhall Dinedor Cross Shelwick Green Upper Town Baysham Little Marcle Birley Logaston Tedstone Wafer Covender Welsh Bicknor Wayend Street Hagley Park Gate Eardisley Yarpole The Wymm Upper Hill Mahollam Bycross Tillington Trelough Flaggoners Green West Town Howton Leinthall Earls Haven Greenhill Wofferwood Common Withington Falcon High Lane Lower Broxwood Preston Marsh King's Caple The Broad Upper Egleton Goose Pool Brampton Bryan Horseway Head Clifford Bircher Much Birch Parkway Knill Llangarron Wacton Cobhall Common Wormbridge Common Mansel Lacy Ledgemoor Nokelane Head Stoke Cross Comberton Brilley Ashperton Stanford Bishop Gorsley Common Stoke Lacy Upper Kinsham Urishay Common Newlands Wood End Kymin Field's Place Bridstow Cobnash Elton's Marsh Upper Welson Lea Coldharbour Deerfold Adley Moor Pembridge Wynn's Green Hawkersland Cross Tudorville Lower Hardwick Vowchurch Collington Upper Hergest Burmarsh Urdimarsh Twyford Common Lower Bearwood Stretford Kerne Bridge Whitney-on-Wye Moreton Bacton Peterstow Humber Lower Maes-coed Coxall Wigmore Sugwas Pool Hardwicke The Leys Dorstone Stretton Sugwas New Town Cornett White Stone Greytree Crozen Trereece Woods Eaves Bromyard Downs Upper Broxwood Durlow Common Nutfield Marstow / Llanmartin Credenhill Hill-field Llancloudy Stanley Hill Brelston Green Welsh Newton Aconbury Tarrington Brick End Hegdon Hill Parkway The Parks Portway Yazor Little Garway Waller's Green Stagbatch Sutton Lakes Abbey Dore Foy Knapton Green Pontrilas Wilton Bellamore Hom Green Coddington Callow Ledicot Brobury Wynds Point Colwall Green Ruxton Green Upper Lye Lyonshall Woodbrook Bowley Ocle Pychard Lower Rabber Belmont Stocking Stapleton Lower Todding Tumpy Lakes Ross-on-Wye Lingen Brinsop Common Nunnington Barton Court Callow Marsh Byton Aulden Birtley Great Brampton Putley Common Kingswood Little Cowarne Shenmore Ham Green Perrystone Hill Wharton Trumpet Moreton on Lugg Ryeford Nextend Whitechurch Maund The Heath Hoarwithy Bredward Sallys Chance's Pitch Golder Field Ashton St Weonards Sunset Brilley Mountain Combe Letton Staunton on Arrow Whitbourne Bull's Hill Putson Lower Burton Moorfields Lower Kinsham Westbrook Little Brampton Upton Crews Preston Wynne Little London Buckcastle Hill Moorend Cross Nupton Ryelands Llangrove Dancing Green Marlas Dukes King's Pyon Colwall Stone Cholstrey Hurstley Westmoor Lawton Bleak Acre Snodhill Wyson Baron's Cross Aston Crews Fromington Strangford Fownhope Turnastone Dodmarsh Burrington Bagwyllydiart Brampton Abbotts Woonton Ash Putley Green Lower Harpton Marlow Bringewood Forge Hillhampton Monkhide Orleton Common Elms Green Bartestree Beggars Ash Weobley Marsh Stony Cross Cabal Ruxton Veldo Halmond's Frome Crow Hill Great Doward Hope under Dinmore Little Gorsley Upper Colwall Fromes Hill Wellington Marsh Bolstone Green Crize Aston Newman's Place Little Common Wormelow Tump Woonton Hope's Rough Luntley The Bage Hungerstone Kinnersley Newtown Sollers Hope Crowmoor Ford Munderfield Row Marston Stannett Withington Marsh Chickward Bishon Common Ballingham Hill Brimfield Orcop Hill Edvin Loach Bartonsham Totnor Welshman's Lane Kingsland Pentre-Jack Winter's Cross Bodenham Stoke Edith Little Dewchurch Bowley Town Old Gore Altbough Wolferlow Newton Farm Wetmore Upper Maes-coed Pencraig Llanrothal Docklow Pontshill Marsh Dinedor Blakemere Woonton Sutton Marsh Broadway Lands Shirl Heath Hatfield Broomy Hill Newton College Hill Ballsgate Common Crizeley Brimfieldcross Hyde Ash Coughton Orleton Pen-pwll-sond Ridgeway Cross Portway Rodd Litmarsh Hamnish Clifford Llandinabo Sellack Westhope Huntington Sutton St Nicholas Pencombe Stretford Netherton Garway Hill Canon Bridge Symonds Yat Little Birch Crossway Madley Green Lane Huntington Cold Green Bodenham Bank Upperton Grendon Green Auberrow Luston Ashley Moor Eaton Bishop Yatton Todding Wilson Buckton Ledbury Much Marcle Fawley Chapel Bodenham Moor Pencoyd Staunton on Wye The Cleaver Byford Common Holme Marsh Meer Common Moorcot Upper Buckenhill Widemarsh Almeley Merrivale Stoke Lane Monnington on Wye Goodrich Cross Grendon Bishop Burghill Richards Castle Bailey Lane End Waterloo Crick's Green Tidnor Almeley Wootton Willersley Jug's Green Bishops Frome Grafton Thornbury Craswall Edwyn Ralph Little Merthyr Pontshill Garway Whitton Little Hereford Yarkhill Catley Southfield Harewood End Ridge Hill Bush Bank Pudleston Bowley Lane Winnal Upton Bishop Clock Mills Hales Bank Ashfield Hartleton Lulham Portfields Pipe and Lyde Old Wharf Common Bach Isle of Rhea Portway Lugwardine Whyle Aymestrey Llanveynoe Upper Dormington Pixley Cusop Sapey Common Kynaston Kingstone Mansell Gamage Acton Beauchamp Ruckhall Tarrington Common Moor Park Batchfields Brinsop Biddlestone Weobley Cross Llyde Cock Gate Weston Beggard Scotland Bank Swinmore Common Bosbury Letton Turkey Tump Middle Maes-coed Goodrich Lower Hergest Stoke Prior Sarnesfield Barrelhill Green Kenchester Llanrosser Holme Lacy Bobblestock Stretford Court The Riddle Rushock Becknell Hole-in-the Wall Lower Bullingham Little Doward Lyde Cross Pen-y-Park Felton Meadow Green Munstone Hendre Shutton Evendine Bredenbury Walterstone Common Floodgates Thruxton Upper Lyde Lower Breinton Bradnor Green Vowchurch Common Perton Preston on Wye The Fording The Hundred Grittlesend Broad Green Maund Bryan Eaton Kingstone Lower Town The Weaven King's Thorn Kingsfield Pow Green Colwall Aylton Brinkley Hill Even Pits Hill of Eaton Bridge Sollers Sandyway Storridge Archenfield Bringsty Common Rushall Donnington Brockmanton West Lydiatt Beavan's Hill Acton Green Wellington Trewen Middleton Upper Hamnish Nash White Cross Elmdale Red Hill Bearwood Bredwardine Flintsham Tedstone Delamere Linton Hill Downton on the Rock Newton Clencher's Mill Wootton Norton Wood Pikestye Eyton Stowfield