ACCA LW ^Eng Syllabus G. Insolvency Law - Explain Administration - Notes ^{2 / 2}

What's the point of Administration?

To save the company from liquidation - keep it as a going concern
Get a better result for creditors - than just winding up

Or - if in best interests of creditors..
To realise the assets and make distributions to creditors

How?

Replacing the directors (if they wish)

How long for?

Up to 12 months, or until the administrator feels they can resign

What powers have they got?

Run the company as they see fit
Appoint/remove Directors
Pay monies to secured/preferential creditors (without court approval)
Pay monies to unsecured creditors (with court approval)
Take custody of all company property
Dispose of company property

Administration Orders

Brought by Directors or Creditors - if granted by the courts:

1. Winding up petitions are dismissed

2. Assets cannot be reclaimed by secured charge holders

3. Assets held under hire purchase agreements cannot be re-possessed