Administration - process

Question 1

what are the consequences for the administrator if they do not follow the process?

Answer 1

it is a criminal offence

Question 2

what are the five main stages?

Answer 2

1. Statement of affairs
2. Administrator drafts proposals to achieve the statutory aim
3. Creditors approve proposals
4. Proposals implemented
5. End of administration

Question 3

what happens in the ‘statement of affairs’ stage? what is a statement of affairs?

Answer 3

the administrator requests company officers prepare a statement of affairs (= full financial particulars of the company i.e. property, debts, liabilities)

Question 4

who must the administrator send their proposals to and within what time frame?

Answer 4

• Must be sent to creditors, RoC & SHs within 8 weeks of appointment.
• Timescale can be ext. by court order or with creditors’ consent

Question 5

how can creditors approve the proposals and within what time frame?

what happens if the proposal isn’t approved?

Answer 5

Must be given within 10 weeks of A’s appointment (can be ext. if necessary)

Decision can be taken by a decision procedure or deemed consent procedure

the creditors can propose amendments but if an agreement can’t be reached the administrator must apply to the court

Question 6

explain the decision procedures and deemed consent procedure

Answer 6

o Decision procedures under IA 1986 inc. correspondence, electronic vote, virtual meeting, physical meeting

o Deemed consent procedure = decision made by creditors not objecting to a course of action. If more than 10% in value (i.e. £100k debt, objectors hold £10k) object, decision doesn’t pass and future decisions must be taken using a decision procedure.

Question 7

what are the administrator’s reporting obligations throughout administration?

Answer 7

• A must report any decisions to ROC + the court as soon as reasonably practicable
• A must provide a progress report to creditors + ROC every 6 months

Question 8

when does administration end?

Answer 8

Ends automatically after 12 months (can be extended by the court)

An application to end administration early can be made to the court if:
o The statutory objective has been met
o A believes a statutory objective cannot be met (usually accompanied by a WUP)
o Creditors can apply in some circumstances.