Once a company enters into administration, the powers of the directors are vastly reduced. The administrator assumes control of the business and has the authority to run the business in the way which is most appropriate to protect the position of the creditors.
 
The business continues to trade

If administrator decides all or part of the company should continue to trade, they may recommend that any associated directors remain in their positions. However, they may decide that some or all of the directors should be replaced.

The business is sold

If company is sold then the purchaser of the business may wish to take on some or all of the directors. Under European transfer of undertakings and permanent employment (TUPE) law, the purchaser of the business will have to take on all current employees including directors under their current terms of employment.

It is often the case that the directors of the old company do not want to work for a new owner and therefore may well resign of their own accord or take redundancy.

The business is closed

If the administrator decides that the best course of action is to close the business, then a liquidator will be appointed and the directors dismissed.

It is extremely important to understand that one of the obligations of the liquidator will be to investigate the conduct of the directors (or any person who seems to have acted in the capacity of a director). The liquidator will produce a report which will highlight whether any director has been in breach of their duties, particularly in allowing the company to trade while insolvent.

If such a claim is upheld, the associated director could be struck off as a director and held personally liable for company debts.