Updated: 5th May 2021
Company administration is a formal insolvency procedure that allows viable companies to restructure and regain their footing in the market. It is only suitable in certain circumstances, notably where there are assets of value that can be sold to raise funds, and where cash flow can be predicted with relative confidence.
A licensed insolvency practitioner (IP) is appointed as administrator, and initially assesses the future viability of the business. In some cases a trading administration may be appropriate, in which case the company continues to trade through the term of administration.
Begbies Traynor is the largest professional services consultancy in the UK. We specialise in company insolvency and are available for appointment as administrator.
On appointment, the administrator carries out a detailed review of the company’s financial position and determines whether a trading administration might be appropriate. In many instances this type of administration can maintain a company’s position in the market and crucially, prevent a significant fall in value.
A company in this situation may not always be in a position to carry on trading, but when it is, the administrator will reorganise the company’s affairs whilst it continues with trade, restructuring in a way that offers the business the best chance of success.
Restructuring could include a number of cost-saving and cash-generating measures, such as redundancies, selling assets of value, and cancelling onerous contracts that would have a negative impact on the company moving forward.
When a company enters administration the appointed IP must identify a potential exit route for the business. Depending on the situation this could include selling the underlying assets in a ‘pre pack’ sale, negotiating a deal with creditors to repay debt over a period of time, or in the worst-case scenario, liquidation and business closure.
A trading administration differs from other forms of company administration in that the company is deemed sufficiently viable to continue trading whilst a plan is formulated by the administrator.
If your company is experiencing financial decline, or you would like more information on trading administration, call one of the team at Begbies Traynor to arrange a free same-day consultation. We are insolvency specialists and operate an extensive network of offices around the country so you are never far from professional help.