Page 280 - AAA Integrated Workbook STUDENT S18-J19

Chapter 193 4

Administration

2.1 Introduction

Administration is the process whereby an insolvency practitioner is
appointed to manage the affairs of a business (Enterprise Act 2002).

It is often used as an alternative to liquidation with a view to:

 Rescuing a company in financial difficulty

 Achieving better results for creditors than could be achieved through liquidation

 Realising property to pay off secured creditors.

2.2 Consequences

The administrator takes control of managing the company.

They must follow any proposals approved at any meeting of creditors or dictated by
the courts. However, particular powers include:

 Removal or appointment of directors

 Calling meetings of creditors and/or members

 Making payments to secured or preferential creditors

 Making payments to unsecured creditors, if it is felt that this will assist the
objectives of the administration

 Presenting or defending a petition for liquidating the company.

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