A guide for company directors
Company Administration, and what it involves
Administration is a formal insolvency procedure that can create breathing space: time to assess a company’s position, protect a viable business from immediate creditor action, and consider whether it can be restructured, sold or wound down in a more orderly way. It is not a pause button, and it is not right for every insolvent company. This guide explains how it works, what it can and cannot do, and what happens to directors, employees, contracts and creditors.
You do not need to know whether administration is the right answer before you speak to us. Working that out is part of the conversation, and the initial consultation is free and confidential.
In short
Administration places a licensed insolvency practitioner in control of a company’s affairs, business and property. The administrator is an officer of the court, whichever route they are appointed by. Directors remain in office, but their management powers normally cease, or may be exercised only with the administrator’s permission.
While the company is in administration it has statutory protection from many forms of creditor and legal action. That protection gives the administrator an opportunity to pursue one of the statutory purposes of administration — but it does not, by itself, mean the company will survive.
Rescuing the company is not the same as rescuing the business
This distinction matters more than any other in administration, and it is where most misunderstanding arises. Three quite different outcomes sit under the same procedure.
Rescue the company
The same legal entity continues as a going concern — often through a restructuring or a Company Voluntary Arrangement. This is the first statutory purpose, and the hardest to achieve.
Rescue or sell the business
The trading operation, goodwill, contracts and sometimes the employees move to a purchaser. The business continues; the original company usually enters liquidation or is dissolved afterwards.
Realise assets
Where neither rescue is reasonably practicable, property is realised so that a distribution can be made to secured or preferential creditors, without unnecessarily harming creditors as a whole.
The statutory purposes, in order
An administrator must perform their functions with one of the following objectives, and must take the first that is reasonably achievable. These are statutory tests, not marketing descriptions.
- Rescue the company as a going concern.
- Achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up immediately — where rescuing the company is not reasonably practicable, or where this route would produce the better result.
- Realise property to make a distribution to secured or preferential creditors — only where neither of the first two objectives is reasonably practicable, and without unnecessarily harming the interests of creditors as a whole.
The practical consequence: administration should not be recommended simply because a company has debts. There must be a reasonable prospect of achieving one of these purposes. Where there is not, another route — a Creditors’ Voluntary Liquidation, a CVA, refinancing or an informal turnaround — is likely to serve everyone better.
Could Administration be appropriate?
It may be worth considering where
- A viable underlying business needs protection from immediate creditor action.
- A winding-up petition or other enforcement threatens a potentially recoverable business.
- Time is needed to market and sell the business as a going concern.
- A controlled period of trading could preserve value.
- A restructuring or CVA is being explored.
- There are valuable contracts, goodwill, intellectual property, property or work in progress that an immediate liquidation would damage.
- Administration could produce a materially better result for creditors than immediate liquidation.
- A secured lender with a qualifying floating charge is considering enforcement or appointment.
- A sale of all or part of the business may preserve operations and employment.
It may not be the right route where
- There is no viable business, and no meaningful asset value to protect.
- None of the statutory purposes can realistically be achieved.
- The costs of the procedure would consume value without improving the outcome.
- An alternative — informal restructuring, a CVA, refinancing, a CVL or another procedure — would be more appropriate.
You do not need to decide that administration is the answer before speaking to us.
The administration process, step by step
1
Confidential initial assessment
We review the company’s financial position, cash requirements, creditor pressure, secured lending, assets, employees, contracts and the rescue or sale options available.
2
Viability and outcome analysis
Is administration reasonably likely to achieve a statutory purpose, and how does the expected result compare with the other options open to the company?
3
Stabilisation and contingency planning
Depending on the circumstances: managing cash, communicating with lenders, securing records, arranging valuations, planning what to say to staff and customers, and testing whether the business can keep trading.
4
Identifying the appointment route
An administrator may be appointed by the company or its directors, by the holder of a qualifying floating charge, or by order of the court. Other specialist routes exist but rarely change the shape of the decision.
5
Required notices and court filings
The precise filing and notice requirements depend on the appointment route, any existing security, and whether a winding-up petition has already been presented.
6
Administrator appointed
Once the appointment takes effect, the administrator assumes control of the company’s affairs, business and property, and the administration moratorium applies.
7
Immediate operational decisions
Whether to continue trading, whether redundancies are unavoidable, which contracts to negotiate, whether funding is available, and how the business should be marketed or a sale progressed.
8
Statement of affairs and information gathering
Directors and relevant employees may be required to provide records, explanations and a statement of the company’s affairs.
9
The administrator’s proposals
The administrator must normally send creditors proposals explaining how the purpose of the administration will be achieved, before the end of eight weeks from the date the company entered administration.
10
Creditor consideration and implementation
Creditors consider the proposals through the applicable decision procedure. The administrator then implements the approved strategy, subject to their statutory duties and powers.
11
Exit from administration
The company may leave administration through rescue, a CVA, liquidation, dissolution or another appropriate statutory route.
How quickly can a company enter administration?
Where urgent protection is necessary, an administration can sometimes be arranged quickly. But the timetable is genuinely case-specific, and we will not quote a fixed period before we understand the position. What drives it:
- The appointment route.
- Whether a winding-up petition has already been presented.
- The terms of any secured lending, and whether there is a qualifying floating charge holder.
- Notices required to a secured lender.
- Whether a court hearing is required.
- The availability and consent of a suitable insolvency practitioner.
- The quality and availability of company records.
- Immediate funding requirements.
- Employee, property and trading issues.
- Whether a business sale or trading strategy has to be prepared.
- The need for independent valuations and marketing.
When to seek advice without delay
Urgent advice is important where the company faces a winding-up petition or the threat of one, enforcement by a secured lender, repossession of essential assets, termination of critical contracts, loss of an essential licence, or an inability to meet payroll.
Once a petition has been presented, the appointment routes available and the procedural requirements may change. Early advice tends to preserve options; it cannot guarantee that proceedings will be stopped.
How long does Administration last?
There is more than one timescale at work: the appointment and stabilisation period, the period in which proposals are prepared, the operational administration itself, and the company’s eventual exit.
| Stage | General timing |
|---|---|
| Initial assessment and planning | Case-specific |
| Appointment | Depends on the appointment route and the circumstances |
| Administrator’s proposals | Normally issued within eight weeks of entering administration |
| Administration period | Can end sooner, but normally expires automatically after 12 months unless extended |
| Exit | Rescue, CVA, liquidation, dissolution or another appropriate route |
An administration may end sooner where its purpose has been sufficiently achieved or cannot be achieved, and it may be extended with the appropriate creditor consent or by the court. An extension does not mean the administration has failed: complex asset sales, litigation, distributions or tax matters often need more time.
One point that often surprises directors: the length of the administration is not the same as the time taken to agree or complete a business sale. A sale may happen early in the case, while the administration remains open to deal with claims, further asset realisations, reporting and distributions.
What protection does Administration provide?
The administration moratorium
Once the relevant protection applies, creditors are generally restricted from beginning or continuing certain actions against the company or its property without the administrator’s consent or the permission of the court. That may restrict winding-up action, enforcement of security, legal proceedings, execution and other enforcement processes, repossession of goods under hire-purchase arrangements, and forfeiture of leased premises.
What it does not do
- It does not cancel or write off the company’s debts.
- It does not prevent every conceivable action in every circumstance — exceptions apply, and the court may permit certain proceedings.
- It does not remove or invalidate valid security; secured creditors retain important rights.
- It does not fund the company: the practical costs of operating during administration still have to be met.
- It creates breathing space. It does not, by itself, produce a rescue.
The administration moratorium is a different thing from the standalone Part A1 company moratorium introduced by the Corporate Insolvency and Governance Act 2020. The two are often confused; they have different entry requirements, effects and duration.
Who controls the company, and can it keep trading?
Control passes to the administrator
The administrator manages the company’s affairs, business and property. Directors remain in office, but their management powers are normally suspended and can be exercised only with the administrator’s consent. In practice the administrator may ask directors or senior managers to stay involved and help run operations — but they act in pursuit of the statutory purpose and in accordance with their duties to creditors. The administrator is not the directors’ personal representative, and where a director’s personal interests may differ from those of the company or its creditors, that director should take separate advice.
Trading in administration
A company in administration may continue trading where the administrator considers it appropriate. Continued trading can preserve the value of the business, allow a controlled sale process, complete profitable contracts and work in progress, maintain customer relationships and goodwill, improve the outcome for creditors and preserve employment.
It also requires funding, and it must be justified by the expected benefit. The administrator may instead conclude that trading should stop immediately, that only part of the business should continue, that an immediate sale is appropriate, that redundancies are necessary, or that assets should be realised without further trading. No practitioner can promise in advance that trading will continue.
What happens to employees
Employees do not automatically lose their jobs simply because an administrator has been appointed. The administrator assesses whether all or part of the workforce is needed — some employees may remain while the business trades or is marketed, and redundancies may nonetheless be necessary.
In some business sales, employment may transfer to the purchaser, potentially subject to TUPE. TUPE and the insolvency-related employment rules are complex and the outcome depends on the structure of the transaction, so specific advice should be obtained rather than assumptions made. Employees who are dismissed may be able to claim qualifying amounts — such as redundancy pay, notice pay, arrears of wages and holiday pay — through the Redundancy Payments Service, subject to eligibility and statutory limits.
Whatever the outcome, employees should be given clear information as soon as circumstances permit. We will help plan those communications, because handled badly they damage both people and value.
What happens to directors
Directors remain subject to their legal duties and must cooperate with the administrator. That normally means supplying books, records and financial information; preparing or assisting with a statement of affairs; explaining transactions and the circumstances that led to insolvency; helping identify and secure company assets; attending meetings or interviews when reasonably required; and not dealing with company property without authority.
Conduct reporting is routine
The administrator must review and report on the conduct of directors as part of the statutory process. This happens in every case and does not, in itself, mean wrongdoing is suspected.
Where personal exposure can arise
Personal guarantees; an overdrawn director’s loan account; wrongful or fraudulent trading; misfeasance or breach of duty; preferences; transactions at an undervalue; improper dividends; and unauthorised use or disposal of company property. We will not offer blanket reassurance on personal liability — it depends on the facts, and it is better examined early.
Personal guarantees
Entering administration does not cancel a personal guarantee. Following default, a lender or supplier may seek payment from the guarantor, depending on the terms of the guarantee, whether a demand has been made, the underlying security, any recoveries made through the administration, the enforceability of the document, and any standstill or settlement agreed with the lender. Take specific advice before entering into settlements, making payments or negotiating guaranteed liabilities.
Contracts, leases and licences
Administration does not automatically preserve every contract, and an administrator cannot simply cancel any agreement at will. The administrator reviews the company’s contracts and ongoing obligations and decides, commercially and legally, what to do with each.
Some agreements contain insolvency-related provisions, although the effectiveness of certain termination clauses can be affected by current insolvency legislation. Landlords, finance providers, customers, suppliers and licensors have different rights. Essential suppliers and ongoing services often require negotiation. Contracts may be completed, sold, assigned, renegotiated or terminated, and regulatory licences and permissions need separate consideration. The consequences depend on the agreement and the applicable law.
Trading administrations, sales and pre-packs
Trading administration
A trading administration is one in which the administrator continues to operate all or part of the business for a period after appointment — to preserve going-concern value, to run an orderly marketing process, to fulfil profitable work, to enable a sale, to avoid the immediate loss of goodwill and customer relationships, and to improve returns for creditors.
The challenges are real: trading needs funding; continuing losses reduce creditor recoveries; suppliers may require payment on revised terms; employees and customers need careful and honest communication; and the administrator must keep assessing whether trading remains justified.
Pre-pack administration
In a pre-pack, the sale of all or a substantial part of the business is negotiated before the administrator is formally appointed, and completed on or shortly after appointment. Where delay would damage the business, this can preserve goodwill, customer relationships, value and employment.
It does not mean a purchaser receives the business without scrutiny. Assets should be independently valued; the administrator must be satisfied that the transaction achieves the appropriate statutory purpose; and competing offers and evidence of market testing must be considered where relevant. The administrator acts for creditors — not for the proposed purchaser and not for former directors. A sale to directors or another connected party is never automatic.
Sales to connected persons: the additional rules
Where there is a substantial disposal of the company’s business or assets to a connected person during the first eight weeks of administration, the administrator must not complete the disposal unless creditors approve it, or the administrator has received and considered a report from a qualifying evaluator obtained by the connected purchaser.
An evaluator’s report is not an approval of the sale. The administrator must still exercise independent professional judgement. And these rules apply to substantial connected-person disposals generally — not only to transactions people describe as “pre-packs”.
Can the existing directors buy the business or assets?
Directors or a connected company may make an offer, but they have no automatic right to acquire the business. The transaction must be in creditors’ interests; assets must be properly valued; the consideration and terms must be supportable; alternative offers may need to be considered; the connected-person disposal rules may apply, and a qualifying evaluator’s report or creditor approval may be required. Restrictions on re-using the same or a similar company name may also apply, and funding and regulatory matters must be addressed before completion. (Technical note: the re-use of company names is governed by section 216 of the Insolvency Act 1986; breach carries personal and criminal consequences, so advice should be taken before any new company is named.)
Creditors, secured lenders and costs
Creditors
Creditors receive notice of the appointment and, in due course, the administrator’s proposals. They submit details of their claims, and may approve or modify the proposals through the applicable decision procedure; a creditors’ committee may be formed. Secured, preferential and unsecured creditors have different rights and priorities, and the return to each depends on asset realisations, the costs of the administration, security and statutory priority. Administration does not guarantee that any creditor will be paid in full. The administrator reports on progress; some distributions may be made during the administration, and others through a subsequent liquidation.
Secured lenders
Secured lenders often play an important part in an administration. The holder of a qualifying floating charge may have the power to appoint an administrator, and a proposed appointment by the company or its directors may require notice to that charge holder — who may be entitled to appoint its own preferred administrator, subject to the statutory requirements. Fixed-charge, floating-charge and other security interests all require careful review. The moratorium affects enforcement, but it does not erase or invalidate valid security. Where lender enforcement is threatened, early engagement matters.
What does administration cost?
There is no universal administration fee, and we will not quote one before we understand the case. Cost depends on the company’s size and complexity, whether the business continues trading, the number of employees and locations, the nature and value of assets, the urgency and appointment route, marketing and valuation requirements, legal, property, funding and regulatory issues, the proposed sale or restructuring strategy, creditor claims and litigation, and the length of the administration.
An administrator’s remuneration and expenses are subject to statutory approval and reporting requirements; depending on the circumstances, approval may be given by creditors, by a creditors’ committee or by the court. Before anything is committed, we will explain the likely preparatory costs, how the process could be funded, the proposed basis of remuneration, and the estimated impact on creditors.
How Administration ends
The principal exit routes are rescue of the company as a going concern; a Company Voluntary Arrangement; exit into a Creditors’ Voluntary Liquidation; exit into compulsory liquidation in relevant circumstances; dissolution where the statutory conditions are met; the ending of the appointment because the purpose of the administration has been achieved; or a court-ordered termination or another appropriate statutory exit.
Selling the business does not necessarily bring the administration to an end. The administrator may still need to collect money in, resolve claims, report to creditors and make distributions.
Administration compared with the alternatives
| Route | Who is in control | Typically used to |
|---|---|---|
| Administration | Administrator | Protect a viable business while rescue, restructuring or a better-value sale is pursued |
| Creditors’ Voluntary Liquidation | Liquidator | Close and wind up an insolvent company in an orderly way |
| Company Voluntary Arrangement | Directors, with a supervisor | Compromise creditor claims while the company continues to trade |
| Compulsory liquidation | Liquidator (court process) | Wind up a company following a petition to the court, generally creditor-driven |
| Part A1 moratorium | Directors, with a monitor | Obtain a short, separate statutory breathing space while a rescue is developed |
| Receivership / LPA receivership | Receiver, for the appointing lender | Realise specific secured property under the security document — different powers and objectives |
| Informal turnaround or refinancing | Directors | Resolve pressure by agreement where creditor support and adequate funding can be achieved |
Choosing between these is a commercial judgement as much as a legal one, and it depends on the funding available, the strength of the underlying business and the pressure the company is already under.
What we will need from you
Bring what you have. Incomplete or imperfect records should never stop an initial conversation — a large part of what we do is making sense of an unclear picture.
- Recent statutory and management accounts
- Current cash-flow information and bank statements
- A complete creditor list, including HMRC liabilities
- Employee and payroll information
- Asset schedules
- Debtor and work-in-progress information
- Finance agreements
- Details of fixed and floating charges
- Personal guarantees
- Property leases and ownership information
- Critical customer and supplier contracts
- Regulatory licences
- Details of litigation and enforcement
- Any statutory demand or winding-up petition
- Director’s loan account information
- Recent transactions involving directors, shareholders or connected parties
- Details of any proposed purchaser or sale
- Short-term funding requirements
Is creditor action already underway?
If the company is dealing with a statutory demand, a winding-up petition, secured lender enforcement, repossession, court judgments or enforcement officers, termination of essential contracts, loss of funding, an inability to meet payroll, or the closure of essential premises, please speak to us sooner rather than later.
The appointment routes and options available can change as legal action progresses. Prompt professional advice often preserves options — although no adviser can guarantee that proceedings will be stopped.
Speak to CRG as soon as possible — 01472 250001
Why speak to CRG
Independent and family-run. You deal directly with experienced insolvency professionals, not a call-handling process.
Over 80 years’ combined experience. Administrations are work we undertake regularly, not occasionally.
Commercial as well as technical. We assess rescue, sale and restructuring options on their merits, and compare them honestly.
Alternatives considered first. We look at the options before recommending any formal appointment — including the option of not making one.
Clear explanations, without judgement. Plain English, and a straight answer where rescue is not realistic.
Lincolnshire-based, advising UK-wide. The initial consultation is free and confidential.
Administration is only one possible route
The earlier we understand the company’s position, the more clearly we can assess whether the company can be rescued, whether the business can be protected, and what other options remain. Your initial consultation is free and confidential.
Questions directors ask us
Short answers to the questions that come up most often in first conversations.
What does it mean when a company goes into administration?
A licensed insolvency practitioner is appointed as administrator and takes control of the company’s affairs, business and property, while the company gains statutory protection from many forms of creditor action.
Is a company in administration insolvent?
Almost always, yes — administration is an insolvency procedure, and entry normally requires that the company is or is likely to become unable to pay its debts.
Can administration save a company?
Sometimes. Rescuing the company as a going concern is the first statutory objective, but it is only pursued where reasonably practicable. More often the value preserved is in the business rather than the original company.
What is the difference between saving the company and saving its business?
Saving the company means the same legal entity continues. Saving the business means the operations, goodwill and often the employees continue under new ownership, while the original company is later wound up or dissolved.
Who can appoint an administrator?
The company or its directors, the holder of a qualifying floating charge, or the court by order. The route affects the notices, filings and timing required.
How quickly can a company enter administration?
Sometimes quickly where urgent protection is needed, but the timetable depends on the appointment route, security, notices, funding, records and whether a court hearing is required. We will not promise a fixed period.
How long does administration last?
It normally ends automatically after 12 months, but it can end sooner or be extended with the appropriate creditor consent or by the court.
What happens during the first eight weeks?
The administrator stabilises the position, makes immediate trading and sale decisions, gathers information, and must normally issue proposals to creditors before the end of that period. Connected-person disposal rules also apply within it.
What protection does the moratorium provide?
It generally restricts creditors from starting or continuing certain actions — winding-up action, enforcement of security, proceedings, repossession, forfeiture — without the administrator’s consent or the court’s permission.
Can creditors still take legal action?
Some can, in some circumstances. Exceptions apply, secured creditors retain rights, and the court may give permission for particular proceedings.
Can administration stop a winding-up petition?
Administration may affect the progress of a petition, but the position depends on the stage reached and the appointment route available. Advice should be taken immediately — no outcome can be guaranteed.
Do directors remain in control?
No. Directors remain in office but their management powers are normally suspended, and may be exercised only with the administrator’s consent.
Can a company continue trading in administration?
It can where the administrator considers it appropriate and it is adequately funded and justified by the expected benefit. Trading may also be stopped, reduced or replaced by an early sale.
What happens to employees?
Jobs are not automatically lost. The administrator assesses what the business needs; some employees may remain, redundancies may be necessary, and dismissed employees may be able to claim qualifying amounts through the Redundancy Payments Service.
Can employees transfer to a purchaser?
In some business sales employment may transfer, potentially subject to TUPE. The rules are complex and depend on the transaction, so specific advice is needed.
What is a trading administration?
One where the administrator continues operating all or part of the business after appointment — usually to preserve going-concern value or enable an orderly sale. It requires funding and continual justification.
What is a pre-pack administration?
A sale of all or a substantial part of the business negotiated before appointment and completed on or shortly afterwards. It still requires valuation, market evidence where relevant, and the administrator’s independent judgement.
Can the existing directors buy the business?
They may offer, but there is no automatic right. The transaction must be in creditors’ interests, properly valued, and may require creditor approval or a qualifying evaluator’s report. Company-name restrictions may apply.
What rules apply to a connected-person sale?
For a substantial disposal to a connected person in the first eight weeks, the administrator must have creditor approval or must have received and considered a qualifying evaluator’s report obtained by the purchaser.
What happens to company debts?
They remain owed by the company. Administration restricts enforcement; it does not cancel debt. Recoveries depend on realisations, costs, security and statutory priority.
Will creditors receive payment?
It depends on the outcome of the case. No return can be guaranteed, and distributions may be made in the administration or through a subsequent liquidation.
What happens to secured lenders?
Their security remains valid. A qualifying floating charge holder may be entitled to appoint, or to receive notice of a proposed appointment, and enforcement is affected by the moratorium rather than extinguished.
What happens to personal guarantees?
Administration does not cancel them. A lender may pursue the guarantor after default, depending on the terms of the guarantee, any demand, the security and recoveries made.
Will directors be personally liable?
Not automatically, but exposure can arise from guarantees, overdrawn loan accounts, wrongful trading, misfeasance, preferences, undervalue transactions or improper dividends. It depends on the facts.
Does the administrator investigate the directors?
The administrator must review and report on director conduct in every case. It is routine and does not imply that wrongdoing is suspected.
What happens to an overdrawn director’s loan account?
It is an asset of the company and the administrator will normally seek repayment. Terms may sometimes be discussed, but it does not disappear on appointment.
What does administration cost?
There is no standard fee. Cost reflects size, complexity, trading, assets, urgency and duration. Remuneration and expenses are subject to statutory approval by creditors, a committee or the court.
Administration or liquidation?
Administration is used to protect and pursue value in a business; liquidation is used to wind a company up. Where there is nothing viable to protect, liquidation is usually the more appropriate route.
Administration or a CVA?
In a CVA the directors normally stay in control and creditors accept a compromise. In administration control passes to the administrator, with wider powers including a sale of the business.
How does a company exit administration?
Through rescue, a CVA, a Creditors’ Voluntary Liquidation, compulsory liquidation, dissolution, the ending of the appointment once the purpose is achieved, or another statutory exit.
Important
This guide provides general information about administration for companies registered in England and Wales. It is not personalised legal or insolvency advice, and it should not be relied upon in place of advice on your company’s own circumstances. Administration procedures differ in Scotland and Northern Ireland, where separate advice may be required.
CRG Financial Recovery · company number 04948177 · 01472 250001 · enquiries@crginsolvency.co.uk. Licensed insolvency practitioners, regulated by the Insolvency Practitioners Association. Members of R3. This guide describes the position for companies registered in England and Wales; procedures differ in Scotland and Northern Ireland and separate advice may be required. It is general information, not personalised legal or insolvency advice. Legal and procedural content reviewed 21 August 2026 against the Insolvency Act 1986 (including Schedule B1), the Insolvency (England and Wales) Rules 2016, the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 and current GOV.UK guidance. Statutory periods and figures should be confirmed before further distribution.
Related
The Administration page
This guide sits alongside our main page on the subject, which covers the same ground more briefly and links to the rest of the site.
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