Typical situations
- A winding-up petition or aggressive enforcement is about to remove control from the board.
- The business has value as a going concern, but cannot currently pay its debts as they fall due.
- A sale of the business may preserve jobs and contracts better than a piecemeal closure.
- Directors need a legal framework while a restructuring or sale is completed.
What administration is for
Administration places the company under the control of a licensed insolvency practitioner. The purpose is set by law and is usually to rescue the company as a going concern, or if that is not possible, to achieve a better result for creditors than liquidation would.
It can provide a moratorium against most creditor action. That breathing room is the reason some boards consider it when a petition is imminent or when a going-concern sale needs a legal wrapper.
Pre-pack administration
A pre-pack is a sale of the business and assets arranged before the administrator is appointed and completed immediately afterwards. It can preserve value, jobs and contracts, but it is closely scrutinised, especially where connected parties are involved.
Directors should expect questions about marketing, valuation and why the sale is in creditors' interests. It is not a way to leave behind liabilities without a proper process.
Compare it with the other formal options
If the company can keep trading under its existing management and only needs to compromise unsecured debt, a CVA may be more proportionate. If there is no business to rescue, liquidation is usually the more direct route.
Turnwell helps directors understand those distinctions and prepare for a conversation with a licensed insolvency practitioner where an appointment may be required.
Common questions
Do directors remain in control during administration?
No. The administrator takes control of the company. Directors still have duties to cooperate and may be asked to assist with information, employee matters and the sale process.
Is administration always used to save the company?
No. Rescue is one possible purpose. In other cases administration is used to achieve a better result for creditors than an immediate liquidation, including through a going-concern sale.
Related services
Company Voluntary Arrangements
Understand when a CVA can restructure unsecured debt and when another route is more realistic.
Liquidation and closure
Understand Creditors' Voluntary Liquidation and the other closure options when a company cannot continue.
Creditor pressure
Respond to supplier action, statutory demands and winding-up petitions with a plan rather than a series of short-term holds.
Director support
Get a clear view of director duties, personal guarantees, loan accounts and the personal implications of the company's position.
Related insights
What to do if your company receives a winding-up petition
Practical steps for UK company directors after a winding-up petition is threatened or presented, including the effect on bank accounts and the options that may remain.
Director duties when a company is in financial difficulty
A clear explanation of how UK director duties shift as a company approaches insolvency, including creditor interests, continued trading and record-keeping.
