The company administration is now an extremely popular method for a company to deal with its financial problems. In the last quarter of 2008, some 2000 companies took advice and opted for the administration solution.
When an administration is proposed, it is generally with the intention of saving the whole or part of the company as a going concern, proposing a CVA or achieving a better realisation than might be achieved if the company does not enter into an administration.
If the company has a trading business that would be affected by any cessation in trade, then an admin must be considered. Any closure of stores, or for instance a public house, may lead to loss of confidence, and a resulting loss of trade.
If the company is a people business and relies on its staff, then it will want to protect those staff and the relationships they have. A liquidation may cause a people business to lose staff, and contracts before a rescue package can be put in place.
It would also work for a business that deals with perishable items and this can be combined with a centre-bind which would help the administrator sell these items before they spoiled.
The proposed administrator will prepare his proposal, and present it to court. If the court thinks that there is merit in the proposal, time will be given to see those plans through to fruition. The administrator will then have three months to complete matters before the order expires. He may apply for more time if required, but he must show a reasonable chance of success.
In the vast majority of cases a proposed administrator will have an exit route in mind and move very quickly to put that in place, before those deals expire.
If you have a business that is in trouble, but you think that it can be saved. You need to call an insolvency practitioner now, so they have the best chance of getting maximum value from what is left.
No comments:
Post a Comment