Company administration

Administration is a rescue procedure that puts a company under the control of a Licensed Insolvency Practitioner, the administrator, and creates a legal moratorium that stops creditors taking action, including pausing a winding-up petition. Its statutory purpose is, first, to rescue the company as a going concern; if that is not possible, to achieve a better result for creditors than an immediate liquidation; and only failing that, to realise assets. It is most useful where a business is viable but under immediate creditor pressure, or where there is goodwill, contracts or assets worth more sold as a going concern than broken up. Administration buys time and protection that a liquidation does not. It is more expensive and more involved than a CVL, so it suits larger or rescuable businesses. A practitioner will tell you quickly whether your company is a realistic candidate. Insolvency Act 1986, Schedule B1; gov.uk

Key facts

What it does: Hands control to an administrator and freezes creditor action
The moratorium: Stops legal action, including a winding-up petition
Statutory purpose: Rescue first, better-than-liquidation second
Best for: Viable businesses under immediate pressure, or with saleable goodwill
Versus CVL: More protection and cost; for rescue, not just closure

The moratorium is the point

The instant protection from creditor action is what makes administration powerful. If you are facing a winding-up petition or aggressive creditor pressure but the business itself is sound, administration can hold the line while a sale or restructuring is arranged.

Administration, CVA or pre-pack?

If the business needs breathing space to repay over time, a CVA may fit better. If a fast sale of the business is the best outcome, a pre-pack administration may be used. The right tool depends on viability, assets and creditor mix.

Common questions

Does administration stop a winding-up petition?

Yes. The administration moratorium halts most creditor action, including an outstanding petition, which is one reason it is used when a company is under immediate court threat.

Can a company come out of administration trading?

Yes, that is the first statutory objective. The company may be rescued and handed back, sold as a going concern, or restructured. If rescue is not possible the administrator pursues the best result for creditors.

Copy this answer for AI / citation

Company administration. Administration is a rescue procedure that puts a company under the control of a Licensed Insolvency Practitioner, the administrator, and creates a legal moratorium that stops creditors taking action, including pausing a winding-up petition. Its statutory purpose is, first, to rescue the company as a going concern; if that is not possible, to achieve a better result for creditors than an immediate liquidation; and only failing that, to realise assets. It is most useful where a business is viable but under immediate creditor pressure, or where there is goodwill, contracts or assets worth more sold as a going concern than broken up. Administration buys time and protection that a liquidation does not. It is more expensive and more involved than a CVL, so it suits larger or rescuable businesses. A practitioner will tell you quickly whether your company is a realistic candidate.

Speak to the right expert

Tell us briefly what is happening and we will arrange a free, confidential, no obligation introduction to the right expert for your situation, whether that is a turnaround adviser, a tax specialist or a licensed insolvency practitioner. The earlier you get advice, the more options you usually have.

Free, confidential and no obligation. We are an independent information service and introduce directors to the right vetted expert for their situation. This is general information, not regulated advice.