Company Administration
Explained

Administration costs vary significantly depending on company size, complexity, and duration. Typical costs include:

• Administrator fees: £15,000-£50,000+ for small to medium companies
• Court fees: £2,500-£5,000 for application and hearing
• Legal costs: £5,000-£15,000 for preparation and representation
• Other costs: Valuations, advertising, statutory requirements

Total costs typically range from £25,000-£100,000+ depending on circumstances. These costs are paid from company assets before distributions to creditors.

No, directors lose control once administration begins. The administrator becomes responsible for:

• All business decisions and strategy
• Managing company operations
• Dealing with creditors and stakeholders
• Deciding the company's future

However, directors may be retained as employees if their skills are needed, and they should cooperate fully with the administrator to maximize chances of successful rescue.

Employee rights are generally protected during administration:

• Continuation: Employment contracts continue unless terminated by administrator
• Wages: Ongoing wages are paid as administration expenses (priority)
• Redundancy: If redundancies are necessary, proper procedures must be followed
• TUPE: If business is sold, employees may transfer to new employer

The administrator will try to preserve jobs where possible, but may need to make redundancies if required for rescue or to reduce costs.

Administration has specific time limits:

• Initial period: 12 months from appointment
• Extensions: Can be extended by court or creditors
• Maximum: Generally no more than 2-3 years total
• Early exit: Can end sooner if objectives are achieved

Most administrations conclude within 12-18 months, either through successful rescue, sale of business, or conversion to liquidation.

Several alternatives may be more suitable depending on circumstances:

• Company Voluntary Arrangement (CVA): Formal agreement with creditors while directors retain control
• Informal arrangements: Negotiated payment plans and standstill agreements
• Restructuring: Operational and financial restructuring outside formal procedures
• Members' Voluntary Liquidation: For solvent companies winding down
• Creditors' Voluntary Liquidation: If rescue isn't viable

The best option depends on company viability, creditor support, and specific circumstances. Professional advice is essential.

Limited options exist to challenge administration:

• Court application: Creditors can apply to court if administrator acts improperly
• Replacement: Administrator can be replaced if unsuitable or conflicted
• Early termination: Court can end administration if objectives achieved or impossible
• Appeal: Original administration order can be appealed in limited circumstances

However, once administration begins, it's difficult to reverse. The focus should be on working with the administrator to achieve the best possible outcome.

Success rates vary depending on how "success" is defined:

• Company rescue: 15-25% of companies return to directors' control
• Business sale: 40-50% achieve sale as going concern (preserving jobs/value)
• Better creditor returns: 70-80% achieve better returns than immediate liquidation
• Job preservation: Varies widely, but often 30-60% of jobs saved through rescue/sale

Success depends on factors like company viability, market conditions, administrator expertise, and stakeholder cooperation. Early intervention generally improves outcomes.

Consider administration when:

• Viable business: Company has potential but faces temporary difficulties
• Creditor pressure: Facing winding-up petitions or enforcement action
• Breathing space needed: Time required to implement rescue strategy
• Asset protection: Need to prevent asset dissipation or creditor actions
• Better outcomes: Administration likely to achieve better results than liquidation

Early consideration is crucial - administration is most effective when implemented before the company becomes insolvent or assets are depleted.