A Guide to Managing a Company in Administration

As a company director, once you have decided that administration is the most appropriate insolvency procedure for your company, you must then appoint an administrator. Once appointed, the administrator will immediately take over the management of the company’s affairs. They will have complete control over the business’s assets and manage the day-to-day running of the company for the benefit of the company’s creditors.

During this period, as a company director, you will continue to hold office but cannot get involved in the management of the company without the administrator’s consent. This means that your management powers and duties, like those of the company secretary, are likely to be significantly diminished.

There are certain legal Company Law requirements that remain during the period of administration. That includes submitting annual returns and accounts to the registrar of companies. However, although these legal obligations continue, they are unlikely to be enforced.   

What tasks and procedures are involved for a Director?

There are no fixed rules which apply to a director’s role in the management of a company in administration. In a court-based administration there may be rules specified in the court order, but otherwise, your tasks and responsibilities will be determined by the administrator.

To this cause, the administrator will usually have a conversation with the company directors, which could last hours, days or weeks, depending on the administrator’s understanding of the business. At this point, the administrator will decide whether the company directors’ services are required during the administration, and if so, what their role will be. It’s more likely that the assistance of those directors involved in the day-to-day management of the company will be required. In the case of a trading administration, or where the administrator is happy with the company’s process and controls, it may be that some or all of the management powers will be left with the directors.

The administrator can also choose to remove company directors and approve new directors in their place, although this is uncommon. While in administration, a company director can also resign from their position if that is the course of action they wish to take.

Need advice?

If you would like to talk to someone about administration and whether it’s suitable for your company, call us on 08000 746 757 or use the live chat function below.

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