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What Does Going Into Administration Mean?

Safestyle UK Goes Into Administration

in A guide for redundant employees in administration or insolvency situations Construction News What Does Going Into Administration Mean?

LATEST:Following this mornings announcement, it has been shared that the business has gone into administration. Rick Harrison and Will Wright from Interpath Advisory were appointed joint administrators to H.P.A.S Limited, trading as Safestyle UK, Style Group Holdings Ltd and Style Group UK Ltd on 30 October 2023.Redundancies have been made for 680 of its 750 strong workforce. If you are an employee and have been made redundant or are concerned about what this means for you, please check out our guide.For customers, if you have outstanding orders then they are not going to be fulfilled - unless a buyer is found and the orders are included in the deal.A Bradford based double glazing windows firm has announced its intention to appoint administrators. Safestyle UK announced that it would appoint administrators after weeks of uncertainty at the company. They acknowledged that they haven't been successful in finding a buyer for the company or fresh financiers to provide funding.The company's share price has been falling due to unfavourable trading updates during the autumn, and at the beginning of the month, they announced that they were seeking new investors to provide more funding for the company.They published the following statement on Friday night:Safestyle UK plc (AIM: SFE.) announces that following its announcement of 26 October 2023 (the “26 October Announcement”), the interested parties that were, at that time, involved in the Proposed Sale process as defined in that announcement, have withdrawn their respective interests.Therefore, the Board of the main trading subsidiary of the Group, H.P.A.S. Limited (“HPAS”) and other intermediate holding companies in the Group, namely Style Group Holdings Limited and Style Group UK Limited, has concluded that they are no longer able to continue trading as a going concern.Consequently, the Board has filed notice of intention to appoint administrators to HPAS, Style Group Holdings Limited and Style Group UK Limited in Court today.Unless financial circumstances change, and in accordance with statutory requirements, the board of these three companies intends to appoint administrators within 10 business days.Further announcements will be made as and when appropriate.You can read the original statement here:Additionally, a text message reportedly from the CEO confirms to employees that the business will be put into administration and that there will be a Teams call on Monday at 2:00 PM, at which additional details will probably be disclosed. The way that the intention to appoint administrators was communicated to the personnel has already drawn criticism.A analysis on how the biggest window and door installer dropped from a £250 million valuation to nothing in just six years will one day be conducted. However, employees' top concern right now is whether they will get paid for the work they have completed. Homeowners will be worried about paid deposits, unfinished repairs, and work that needs to be done. Suppliers will be concerned about what will happen to their current inventory and if they will be reimbursed.

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Safestyle UK Goes Into Administration
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Notice of Intention To Appoint Administrators

in What Does Going Into Administration Mean?

A notice of intention to appoint administrators is when the company files a document to the court to outline that it intends to go into administration if a solution cannot be found to its immediate financial problems. It can be used as part of the pre-pack administration process as well as used to restructure a failing business to avoid its liquidation.

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Notice of Intention To Appoint Administrators
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What Does Going Into Administration Mean?

in A guide for redundant employees in administration or insolvency situations What Does Going Into Administration Mean?

Going into administration is when a company becomes insolvent and is put under the control of Licensed Insolvency Practitioners.  The directors and the secured lenders can appoint administrators through a court process in order to protect the company and their position as much as possible. Going Into Administration - A Simple Guide Administration is a very powerful process for gaining control when a company has serious cashflow problems, is insolvent and facing serious threats from creditors. The Court may appoint a licensed insolvency practitioner as administrator. This places a moratorium around the company and stops all legal actions.The administration must have a purpose and the Government encourages the use of company rescue mechanisms after administration. The 3 purposes (or objectives) of Administration Rescuing the company as a going concern. Company rescue as a going concern – this is usually a  company voluntary arrangement. The company enters protective administration and is then restructured before entering into a CVA. The CVA would set out proposals for repayment of debts to secured, preferential and unsecured creditors. When the company has its CVA approved by creditors, then the administration process comes to an end after 28 days. Achieving a better result for the company's creditors This is as a whole than would be likely if the company was to be wound up (liquidation) See the differences between Administration and Liquidation.  This better result is usually obtained by selling the BUSINESS as a going concern to one or more buyers. The company and the debts are “left behind”. The better result may include securing transfer or employees under TUPE, as well as selling goodwill, intellectual property and assets. Controlling and then selling property/debtors. This is called realising assets. Then the administrator makes a distribution to one or more secured or preferential creditors, in order of creditors priority. Usually the business ceases trading and employees are made redundant.Only if the first two options are deemed unattainable, can the administrator use this third option.Under the administration option, it is possible for the company and its directors (or a creditor like the bank) to apply to the court to put the company into administration through a streamlined process.However, the law requires that any finance provider (like a bank or lender), with the appropriate security, is contacted and the aims of the administration be discussed and approved. The finance provider must have a fixed and floating charge (usually under a debenture) and the charge holder will need to give permission for the process to go ahead. Five days clear notice is required.  Be aware, though, that a secured lender can appoint administrators over a company without notice if it thinks its money is at risk.  So communication with the secured lender is essential.  

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What Does Going Into Administration Mean?

Wilko collapses into Administration

in A guide for redundant employees in administration or insolvency situations News Retail What Does Going Into Administration Mean?

29 September 2023Sky News share today that after seeing some proposals from PwC, it is likely that unsecured creditors will receive between 4p and 8p in the pound, from the collapse of Wilko.According to the proposals, The Pension Protection Fund (£20m owed as a secured creditor), along with Barclays (£2.4m owed) and Hilco UK (£39.9m owed) are expected to be paid in full. The PPF is also owed monies as a unsecured creditor,13th September 2023The Range has purchased Wilko's brand and online assets for a total of £5m it is understood. An announcement is expected by the administrators later.  The Range was under pressure to buy the assets as it faced increased competition from online marketplace OnBuy.12th September 2023The owner of Poundland has agreed to take on the leases of dozens of Wilko shops.Pepco Group, which owns Poundland in the UK, is expected to convert up to 71 Wilko stores to the Poundland brand.11th September 2023Today we here the news that the rescue deal on the cards with HMV owner, Doug Putman, has collapsed. It is expected that now administrators of PwC will strike deals with The Range and Poundland's owner.The Range is likely to purchase Wilko's brand and online assets, whereas Poundland are in talks to buy 100 stores.5th September 2023B&M has bought 51 Wilko shops (locations not disclosed) for £13 million after the discount retailer collapsed into administration.The shops are set to be rebranded as B&M.  The retailer did not acquire Wilko’s brand name or any of its intellectual property. It said it would provide an update on the timing of the new B&M openings in November.Despite this arrangement with B&M, a further 1,332 jobs have been lost. Across 52 Wilko stores, 1,016 redundancies will take place, alongside a loss of 299 roles at two of its distribution centres and 17 at its digital operations department.Conversations with administrators continue.Sky News report more.31st August 2023The latest update to be heard on the situation with Wilko is that OnBuy, the online marketplace, has made a last minute rescue bid for the brand. As reported in the Retail Gazette, it is thought that OnBuy only want to continue trading through Wilko.com.Just earlier on today, it was revealed that a proposed £90m deal from private equity firm, M2 Capital, claiming to retain all employees' roles for two years, whilst it saved Wilko from collapse, had fallen through. The bidder was unable to file the relevant paperwork in time which meant the inability to provide proof of funding.Following this, redundancies will shortly commence, with:269 employees at the retailer's support centre (Worksop) to be made redundant from close of play 4th September 14 employees at Kin Limited to be made redundant from close of play 4th September - this is a subsidiary of Wilko For the two distribution stores in Worksop and Newport, redundancies expected to be announced from next weekJoint administrator Jane Steer said: “It’s with great sadness that we announce these redundancies. We’re incredibly grateful to these team members for the support and dedication they’ve shown to the company, particularly over the last few very difficult weeks. We will continue to do all that we can to support staff through this period of difficult upheaval, and to maximise their opportunities for a rapid return to work. Our priority is to ensure that all team members affected by redundancy are assisted in processing their claims with immediate effect. We will be circulating correspondence to all staff as soon as possible which will outline the support available to complete redundancy payment forms. Advice and assistance will also be available from Job Centre Plus and other agencies.''With this in mind, talks are underway still with HMV owner, Doug Putman and PwC.28th August 2023The latest on Wilko x Administration threat is that Doug Poutman, HMV owner, is in discussion with PwC about offering a finance offer for hundreds of Wilko stores. He seeks a £50m backing to do so. If this falls unsuccessful, a deal with Poundland is likely to go ahead.24th August 2023We hear an update today from the administrators of Wilko. They share that jobs are set to go and stores will close as no buyer has been found for the business as a whole. This being said, some parts of the group could be bought.In a statement, PwC said: "While discussions continue with those interested in buying parts of the business, it's clear that the nature of this interest is not focused on the whole group. Sadly, it is therefore likely that there will be redundancies and store closures in the future and it has today been necessary to update employee representatives.''23rd August 2023Rumours share that Poundland owner,  Pepco Group is in talks with PwC to acquire around 100 Wilko stores. Alongside this, B&M European Value Retail are supposedly negotiating over 40-50 stores. There are then various other value retailers, like TOFS, of whom have lodged offers to acquire smaller parts of Wilko's 400 store strong chain.A more official announcement is expected tomorrow on at least some of the sale agreements.Even with such agreements, there still remains risk of some site closures and job losses.Let's see what is to come...18th August 2023The deadline for interested parties to put forward a rescue deal for Wilko has passed. Administrators weigh up rescue bids. In the meantime,  a secondary sale begins, with discounts on hundreds of products in store.It has been heard that B&M, Poundland, The Range and Home Bargains - all competitors of the homeware retailer, have had interest to submit an offer.Whilst PwC are working on this case, no redundancies have been made. Only time will continue to tell the chains future.14th August 2023Companies vying to buy Wilko have been given until Wednesday 16th August to make an offer for the homewares chain which fell into administration last week.10th August 2023High Street home wear retail chain, Wilko, has collapsed into administration appointing PricewaterhouseCoopers (PwC) as administrators. This leaves 12,000 jobs at risk, as well as the future of many of its 400 stores.With the appointment of PwC, it triggers administrators to run a further administration sale, to see if there are any last minute rescue offers. However, should this not be successful, the 93-year-old chain will close and have its assets sold - making Wilko the biggest casualty of the High Street this year.  If you are an employee, worried about what this means for you, read our guide.Further updates to follow.9th August 2023Wilko has suspended all home deliveries, suggesting a fall into administration is inevitable. Talks with buyers have been underway, but it is thought nothing much will come from them, with the latest updates.8th August 2023 The owner of the Laura Ashley brand, Gordon Brothers, is in talks about a potential rescue deal for Wilko. Insiders say the offer may involve Gordon Brothers providing funding to the retailer to implement a restructuring which would involve a key amount of stores closing and jobs lost.PricewaterhouseCoopers (PwC), which is advising Wilkos', is understood to be seeking binding offers within days, with the company close to running out of cash. Should PwC be appointed as administrator, a further sale process will proceed before embarking on a liquidation of the retailers assets, if no rescue deal comes through.3rd August 2023News today is that Wilko is teetering on the brink of administration, with 12,000 jobs at risk.Despite offers from potential buyers, the needed liquidity to cover the cash pressures being faced, has not been met.Mark Jackson, CEO of Wilko announced the decision to file a notice of intention to appoint administrators. In the meantime, discussions will continue with interested parties in the hope of a late-coming rescue. Watch this space!  A notice of intent gives the company 10 days for a rescue deal to be agreed.  If nothing is forthcoming then it is likely that the company will go into formal administration with the loss of thousands of jobs.27th July 2023It has been reported that Hilco have put in another £5m into Wilko to help with the current cash flow problems.19th June 2023It has reported in the news that landlords of Wilko face the chance of no rental payments for at least the next three years, as a CVA is likely to launch in the next month. The restructuring arrangement looks to cut rents at 240 of its 400 stores, with no stores facing closure.One source close to the process told The Times, that the retailer will soon run out of funds and could collapse into administration if a CVA is not agreed.12th June 2023Wilko has brought in CBRE property advisors to open negotiations with landlords on rent reductions.According to the latest news, Wilko is exploring a Company Voluntary Arrangement, in order to renegotiate rents and potentially close some stores, as part of its cost-cutting plans.PwC advisors are said to have been approached, to look into the various restructuring options possible.Chief executive Mark Jackson remarked: “We’re in the early stages of the turnaround and, as is usual, the directors continue to explore all options for Wilko’s long-term future.”16th February 2023Wilko has announced plans to cut more than 400 jobs, including assistant store managers, retail supervisors, head office managers and call centre workers, in the troubled retailer’s latest effort to control costs.4th January 2023It has been reported that Hilco, the retail turnaround fund, has lent £40m to Wilko to secure its long term future.Wilko has said that it has received a £30m emergency loan to see it through the Christmas trading period. It has already sold its distribution centre for £48m and leased it back. Hopefully this will be enough.In a statement Jerome Saint-Marc, Wilko CEO comments:“Our relationship with our lending partners is solid. The recent sale and leaseback of our distribution centre to DHL earlier this week unlocked £48m which has enabled us to repay our revolving credit facility in full. We’re taking this opportunity, now that the deal is done, to review how we manage our ongoing financing to best trade through the current retail environment while continuing to invest in our future.”Suppliers to Wilko have had their credit insurance withdrawn according to reports. If true, this is a big blow as that now means that suppliers will be reluctant to grant Wilko any credit, so putting serious strain on the retailers finances.Both Retail Week and Retail Gazette have reported that the restructuring advisors Teneo have been instructed by Wilko, the homewares store, to look at how it can turnaround its fortunes. Last month it announced that it was extending its payment terms to 60 days and that anyone due to be paid in September would be paid in November.These are indications that the company is struggling. So what options does the chain have? It has already closed down 15 stores but if it needs to close down many more, that might be subject to long leases, then a company voluntary arrangement is a good way to do this. High rents may not be the issue here but increased competition and a drop in trade as the cost of living crisis bites.

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Wilko collapses into Administration

Linder Myers Solicitors Served Winding Up Petition

in A guide for redundant employees in administration or insolvency situations Retail What Does Going Into Administration Mean?

Update 1 August 2023Linder Myers cases are now being handed by Gordons.  You can contact Gordons LLP directly by calling 0113 227 0385 or emailing metamorph@gordonsllp.com.Hundreds of jobs could be at risk after HMRC issued a winding-up petition against law firm Linder Myers Solicitors.The 100-year-old firm, one of 14 legal brands run by Metamorph Group, has locations in Manchester, Chester, Lytham, York, and Shrewsbury.Three of these names—Linder Myers, Donnelly and Elliott Solicitors in Gosport, and SLC Solicitors in Telford—combine to form MLL Ltd, which was this week served with a petition for winding up.The group is “working hard and in collaboration with HMRC to resolve any outstanding matters in relation to our company MLL” a representative for the group told TheBusinessDesk.com.MLL is currently four months behind on its accounts for the year ending in June 2021.Donnelly and Elliott Solicitors, SLC Solicitors, and Linder Myers Solicitors were combined as part of a reorganisation, which resulted in a £2.1 million deficit for the 18 months ending in June 2020, according to MLL’s most recent filed accounts.The company had more than 300 employees and assets worth £4.5 million at the time, yet its financial statements also had a signed promise from Metamorph Group to offer help for at least a year if necessary.The company stated in the notes to the financial statements that “Covid-19 has had a mixed impact on the group, with some areas such as trusts and probate and family increase in demand for services throughout the period and in other areas, the courts slowing down has reduced our ability to complete cases.“Furlough was used to help manage the financial impact of this situation, which also enabled the retention of key skills and capacity within the business.”In a statement addressing the action taken by its creditor, Tony Stockdale, the founder, CEO and Chair of the group, said, “We are working to resolve matters with HMRC and we are very confident of a successful outcome”.He said the group had “a supportive group of shareholders and management team who remain committed to our strategy”.“That said, the action of HMRC was a shock to everyone. As a result we will be making a number of changes in the business to avoid a repetition.”

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Linder Myers Solicitors Served Winding Up Petition

Administration for major UK wedding dress retailer, David’s Bridal

in A guide for redundant employees in administration or insolvency situations News Retail What Does Going Into Administration Mean?

Just hours after its US owner filed for bankruptcy and David's Bridal UK has filed an intention to go into administration. Andy Pear and Milan Vuceljic of Moorfields Advisory have been put on standby to be  appointed as the administrators working on the case.Across the UK, David's Bridal has 100 employees across its four stores in Watford, London, Brimingham and Glasgow.The retailer, founded in America in 1950, has operated in the UK since 2013, specialising in wedding and occasion dresses and accessories - a name known for many to-be-brides!In a statement, David’s Bridal said: “David’s Bridal stores remain open, and the company intends to continue operating in the ordinary course, including by fulfilling all customer orders without disruption or delay.'' It said it “intends to continue exploring a sale of all or some of its assets”.This is not the first time the retailer has faced difficulty. In 2018 it had filed for bankruptcy. According to CEO of the American parent company, meaningful strides had been taken in recent years to meet customers needs and transform accordingly.“Our business continues to be challenged by the post-Covid environment and uncertain economic conditions, leading us to take this step to identify a buyer who can continue to operate our business going forward. We are determined to stay focused on our future, because we believe we have an important role in ensuring that every bride, no matter her budget, can have her perfect dress.”When analysing the recent history of the UK counterpart, it had warned of a “material uncertainty” about its ability to continue in its 2021 accounts, which were signed off by the board last December. This was because the US parent company had done a deal in November 2022 to create additional liquidity that was dependent on “continuing compliance” with the loan terms.The UK business’s most recent published accounts, for 2021, showed a £170,000 loss on revenues of £4.3m. It last recorded an annual profit in 2018.

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Administration for major UK wedding dress retailer, David’s Bridal

Making Employees Redundant

in A guide for redundant employees in administration or insolvency situations What Does Going Into Administration Mean?

Do you need to make a member(s) of your staff redundant? When facing business debt problems, one of the key decisions to make as owner or directors is this: do some roles need to be made redundant to save costs. Is the business going to be smaller if you use a CVA, or sell it through administration for example.Here are some key things to take into consideration. If you fail to act appropriately and correctly redundant employees can make a claim against your company. You could also face tribunals and fines for not acting correctly.If you don’t think your company can afford to make redundancies then read this page for information on how you can do it at NIL COST What is redundancy? Redundancy is the act of an employee losing their job as the job or role they perform is no longer needed. So, when is redundancy necessary? Cost cutting reasonsFor example resizing the company, closing certain departments or branches, perhaps due to an insolvency event such as administration or a company voluntary arrangement. When there is no longer a need for the full time role In this case where a full time role may no longer be available but there may be a new part time role, then the employer must offer the part-time position to the current full-timer.If the employee refuses, usually because the part-time position is not as convenient or suitable as an alternative, then the employee must be paid redundancy pay.Full business closure, either temporary (COVID-19, refurbishment) or permanent So, remember, it is vital to only proceed with redundancy when appropriate as it will impact the employees and your business significantly.A number of alternatives can always be looked into, if trying to cut costs; reducing overtime, freezing any increases to salary/wages, putting a halt on any further recruitment, terminating contracts of temporary or agency staff.When redundancies are compulsory, for example, when employees need to be let go to save business costs and avoid insolvency there are certain criteria you can use to ensure the staff you choose to make redundant is fair. Typically use;Standards of work produced Attendance and disciplinary records Length of employment/service (it is important to avoid age discrimination here) Skills, experience and appraisal data (be careful to avoid sex/disability discrimination)Some employees may self-select and volunteer to be made redundant (usually if they are close to retirement age anyway and their redundancy pay will be worthwhile). Be sure to use previously agreed redundancy procedures made with unions if applicable too.It is vital for you as an employer to…Keep the employee informed with what is happening. Consult the employee and give an honest explanation as to why they have been selected to be made redundant. There is a period of consultation based on the amount of employees being made redundant.For between 20 and 99 employees being made redundant at once, there is a minimum obligation of 30 days and no less, to consult with employees. For 100 or more this period extends to 90 days and for any less, no set amount is required.Look into all other options and discuss this with the employee; are there any alternative employment positions you can offer? Can they be transferred to a different department of the company? Or a different branch? Alternative employment positions must be of a similar nature.The three key aspects of making an employee redundant are;consultation selection offer alternatives.What rights do redundant employees have? When dismissed due to redundancy, employees are entitled redundancy pay, provide the following conditions apply:they are a actual employee of the company, not a subcontractor they have had at least two years of continuous service they have been dismissed for redundancy purposes only.The sum of redundancy pay they will receive depends on their age at dismissal, weekly gross salary and length of service completed. Please note the Government caps the amount at £700 a week, with the maximum statutory redundancy pay at c.£17000.Do also check the employment contract for the employee as they may have alternative conditions. For example, one month’s pay per year of service. If this is the case, the contract entitlement would be followed instead. In any situation, the highest amount is always paid, be it the contractual or statutory amount. Before a staff member can be made redundant, their notice period must be served and this must usually be paid for. You can have more than the statutory minimum, so long it is agreed, but not less. Currently the notice periods are, at least one weeks’ notice if employed between one month and 2 years, one weeks’ notice for each year if employed between 2 and 12 years and 12 weeks’ notice if employed for 12 years+. Be aware that in some situations the employee can be paid in lieu instead, depending on their employment contract entitlements. When employees serve their notice period, allow them paid time off to look for alternative employment.Any accrued, untaken holiday pay will need to be paid for. This is capped at £700 a week and at a maximum of six weeks. Although redundancy payments are tax-free up to £30,000, for holiday pay, both income tax and national insurance are applicable. More about employee rights when being made redundant can be found here.If your business or company cannot afford to make redundancies then your business or company is in effect insolvent. As such, you will need to act and take advice from specialist advisors such as KSA Group the owners of this webpage, who are licensed insolvency practitioners.If the business could be viable after costs such employee roles can be made or other costs can be cut, then a company voluntary arrangement might be the best way to rescue the situation. Any redundancy pay or lieu of notice post an insolvency event may be paid though the RPORedundancy Payments Service Insolvency Service redundancypaymentsonline@insolvency.gov.uk Telephone: 0330 331 0020 Monday to Thursday, 9am to 5pm Friday, 9am to 3pmSee the video below for more information

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Making Employees Redundant

What is Special Administration?

in What Does Going Into Administration Mean?

When attempting to address major debts, a company may choose to enter administration in order to manage the path out of insolvency. It's a process that falls under the Insolvency Act 1986, during which creditors cannot take action against the company.However sometimes when a very large or important organisation is facing insolvency people talk about a process called "Special Administration" What exactly is special administration? The process, like ordinary administration, entails handing over control to administrators who will take steps to turn a company's situation around if possible - or to wind it down in the most efficient manner.A special administration, on the other hand, requires that client assets be recovered as soon as possible.It also necessitates interaction with market regulators, which could be the Financial Conduct Authority or the Bank of England in the case of a financial firm, or Ofgem in the energy sector.Importantly, special administration is a court-ordered action rather than one reached collaboratively by company directors and insolvency practitioners. What is the purpose of a special administration? This is a sector-specific response.In the energy sector, the recent placement of energy firm Bulb into special administration reflected not only the organization's size in terms of its multi-million-person customer base, but also the national necessity of the energy it supplies. When it comes to the financial sector and investment banks, the rise of special administration was precipitated by the failure of Lehman Brothers. Without a special administration, the economic impact of an investment bank's failure could be even more damaging to the overall economy, necessitating the court-ordered process. If Royal Mail went into special administration, it would be to make sure that letters and essential items were delivered in a timely manner during any turnaround.  It would most likely be governed by what is called the Postal Act. Large healthcare providers would also be subject to any special administration due to the potential impact on ill people.As special administration has the potential to involve the highest levels of government then the procedure tends to be lengthy.Administrators will prepare plans within ten weeks of the special administration order, and they will consult with creditors, clients, and the relevant authorities.After a successful court application, the special administration can be completed. It should be noted that it could also be suspended if a company voluntary arrangement is implemented.

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What is Special Administration?

What Is The Difference Between Liquidation And Administration?

in Company Liquidation What Does Going Into Administration Mean?

Administration and Liquidation are both insolvency processes for limited companies who meet the insolvent criteria. Both are governed by the 1986 Insolvency Act. This being said, the processes are very different and each only applicable in certain circumstances. The two are often confused – This page outlines the two processes by explaining their definition as well as exploring some of the main differences between them. What is Administration? Administration involves appointing a licensed insolvency practitioner to a company as it becomes insolvent and can no longer pay its debts. Administrators take over and run the company, taking necessary action to repay creditors. A restructuring and recovery plan is made and implemented and a moratorium is put around the company, whereby they are protected from any legal action during this period. The administrator assesses the companies' viability.The process is temporary and not long term – it runs for typically a year, unless courts and creditors allow this to be extended.Administrators must adhere to the following statutory purposes for their role:  So the aims of administration are the following;Rescue the company as a going concern Realise property or assets in order to distribute to one or more preferential creditors Achieve better results for company creditors overall; better than if it was wound upAfter 14 days of entering administration, employment contracts of the company are taken on by the administrators. Hence, it is favourable for the company to be sold out of administration before this date.  If it can’t be sold then usually the company ceases trading and enters liquidation.Overall, the idea of administration is to try and prevent the company from having to enter liquidation in the first place. It tries to turnaround and rescue a company. However, administrators are duty bound to always act in the best interest of the creditors. What is Liquidation? Liquidation is the process of selling off or realising company assets in return for funds, from which pay the creditors. Usually this happens after the company has stopped trading. An insolvency practitioner works with the directors to do this. The end stage of liquidation is formal dissolution and removing the company from the register at Companies House.Liquidation can occur after administration, if it failed to work, as the company will be left with no other choice than to close.There are two types of liquidation: creditors voluntary and compulsory; one being instigated from creditors needing debts paid off and the other being instigated by the court following winding up petitions from creditors. Main Differences Between Administration And Liquidation Most importantly, administration is an insolvency procedure which aims to rescue the company, whereas a liquidation almost always results in the end of the company.Another difference is that administration can occur when the business has cash flow problems, but the business is viable and may need the protection of the creditors, whereas liquidations occur when the company is no longer viable and becomes insolvent (except in the case of a MVL).During the time of which a liquidation is proposed and a liquidator appointed, a creditor could begin or complete legal action against the company. This contrasts to when a company enters administration and a moratorium period gives protection over any legal action from creditors. Administration vs Liquidation Which is Best For My Company? Liquidation is usually the best solution if the business, in its current form, cannot continue to trade without allowing the company’s creditors position to get worse and there is a risk of wrongful trading for the directors.  Usually the business ceases trading and the company is wound up by the liquidators. There is no ongoing “business” unlike in an administration (see below). After the appointment of liquidators by the creditors the company assets are converted into cash, the business ceases trading, all employees and directors are made redundant, creditors debts are agreed and eventually the company is dissolved.  Liquidation is also a more straight forward process and is more cost effective for smaller businesses.Administration, on the other hand, is appropriate where there is a heavily indebted and insolvent but fundamentally sound business that could be saved by a radical restructure, refinance, reduction of debts, sale of assets and a legal mechanism to stop creditors taking action. A good example of this may be where a customer or customers owe the company a substantial sum of money, but at the same time creditors are losing patience and are taking aggressive action in the form of threatening a winding up petition.  See our case study where we helped with exactly this scenario.Administration is quite costly in that insolvency practitioners need to oversee the trading of the company, insolvency agents and lawyers are involved as well. So, it is usually more appropriate for larger businesses with large debts and perhaps complex issues.  Another situation where administration is appropriate is where there is a lot of value in a "brand"  this is because the brand and goodwill of the BUSINESS can often be sold to help pay creditors and the brand can continue to "live on" in another company.  This is often the case with household names and more consumer facing companies.  You may even be able to buy the business and its brand in a pre pack administration but this is much more difficult these days for regulatory and legal reasons.In liquidation you cannot start a new company with the same name without leave of the court or permission of the liquidator so it is not as straight forward.  Remember an Insolvency Practitioner will not be prepared to be appointed to do an administration, unless he/she can show it will be a better result for creditors than a liquidation.  This is a legal requirement. The usual “better result” comes from continuation of the business after administration, whereas there is no continuation of value post liquidation. Have you considered a Company Voluntary Arrangement Instead of Administration or Liquidation? A company voluntary arrangement may allow you to continue to trade and remain in control of the company!  It is also considerably cheaper than Administration. See this page for details of CVA vs AdministrationWith restructuring, cost reduction and a change in the way management runs the business, a CVA can help reduce and remove debt and focus you on running a successful business.

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What Is The Difference Between Liquidation And Administration?

Administration or Company Voluntary Arrangement CVA

in What Does Going Into Administration Mean? What is a CVA (Company Voluntary Arrangement)?

The process of administration is very different from a CVA. In an Administration, Insolvency Practitioners take control of the company where it can be protected from all legal actions by any creditor. In a CVA the directors remain in control and a legally binding agreement is struck with the unsecured creditors to allow it to continue to trade. A CVA is generally a much less expensive process.

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Administration or Company Voluntary Arrangement CVA