Advantages of Administration
• Once an administration order is granted by the court, all legal actions against the company by its creditors are suspended. This gives breathing space to formulate and implement a recovery or restructuring package.
• The administrator is working for the benefit of the creditors. As such, the solutions proposed and implemented are likely to generate a far better return than simply winding up the business.
• The administrator works to get the best return for all the creditors. Creditors are not treated preferentially.
• Administration gives the opportunity for restructuring within a company to take place. Non profitable parts of the business can be disposed of meaning that the remaining company is able to continue to trade and sustain employment into the future.
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"I was declared bankrupt in March and have found the information on this site extremely informative. I have particularly valued the support from the forum." Mrs Geraldine P
Disadvantages of Administration
• Once an administrator is appointed, the directors loose the power to run the company as they are not in control of the business anymore. If the company is sold to a third party it may lead to directors’ removal.
• An Administration is a public event. All correspondence from the company must highlight clearly that the business is in administration. This situation may seriously affect the company’s ability to continue to trade with key suppliers.
