How long does a Company Administration last?
Administration is not considered to be a quick fix for company insolvency problems, although it can be completed in just a couple weeks if the objective of the procedure, such as a pre-pack sale, can be achieved in such a short period. However, it is also not uncommon for an administration procedure to last a year, after which point, consent of the creditors and the court must be sought to extend the process by a further six months. In some cases, some extensions can lead to administrations lasting as long as two or three years.
The time it takes to complete a company administration depends on a wide range of factors. That includes everything from the party who appoints the administrator i.e. a creditor or the company itself, to the size of the organisation, the complexity of the case and the resolution sought.
Initial time limits
The administrator is required to do everything as quickly as is reasonably practicable. There is a time limit of eight weeks for the administrator to draw up their proposals (details of what they intend to do) and hold the initial creditors meeting. As well as including details that relate to the administrator’s appointment and the circumstances leading up to the administration, they should also give details of how and when they expect the administration to end.
Speeding up the process
- Appointment – Companies and directors can appoint an administrator quickly with the guidance of the insolvency practitioner. All it takes is for a fax to be sent to the court along with the appropriate forms. This does not require a court order, as is the case with a creditor-appointed administrator. The insolvency practitioner must have carried out some research before this to make sure the company is insolvent and an administration is appropriate.
- Pre-arranged sales – In the case of a pre-pack sale, it is possible for company assets to be openly marketed and all arrangements of the sale put in place before an administrator is appointed. The administrator’s first role on appointment can then be to sign off on the sale agreement providing independent valuations are met. In this case, the company administration may take no more than a couple of days.
- Company director assistance – In a trading administration, or where the administrator is satisfied with the company’s processes and controls, they can also decide to leave some or all of the powers of the directors. This can greatly reduce the time it takes to complete the administration.
If you are considering putting your business into administration, you should always seek professional advice in advance. We’re always happy to help, simply give us a call on 08000 746 757 for a no-obligation, free consultation. Or chat using the Live Chat box on the bottom right of the screen.