Company administration is the formal rescue tool in UK insolvency law. It places the company under court protection, stops every creditor enforcement action, and appoints a licensed insolvency practitioner to decide whether the business can be saved, sold, or must be wound up.
The moment the administrator is appointed, an automatic moratorium freezes every creditor action against the company: no winding-up petitions, no field officers, no legal proceedings without the court’s permission. That breathing space is what separates administration from every other insolvency process.
The trade-off is direct: you lose control. The administrator runs the company. You cooperate, answer questions, and watch the decisions you used to make happen at someone else’s desk.
We work with directors entering administration regularly, and most arrive expecting to steer the process. In practice the steering wheel changes hands at the appointment hearing. Knowing that going in is the difference between a productive cooperation and a frustrating eight months.
Administration is a formal insolvency process under Part II and Schedule B1 of the Insolvency Act 1986. An administrator (a licensed IP) is appointed to achieve one of three statutory purposes set out in paragraph 3 of Schedule B1:
rescue the company as a going concern;
achieve a better result for creditors than immediate liquidation; or
realise assets to distribute to secured or preferential creditors.
Pure rescue (the first purpose, where your company emerges intact) is less common than directors hope.
In our experience, the more common outcome is a sale of your business as a going concern followed by a transition of the legal entity to liquidation. That second route still preserves jobs, contracts, and customer relationships; the original company shell does not survive, but the trading operation does.
From cases we handle, when directors arrive at our door asking about administration, the realistic question is rarely whether the company will emerge intact. It is whether a sale of the business is achievable inside the moratorium window, and what the alternative looks like if it is not.
Who Can Appoint a Company Administrator?
Appointer
How it works
When it is used
Directors
File a Notice of Intention to Appoint (Form ADM1) at court, then the appointment itself (Form ADM2). No court hearing required.
The fastest route. The most common in practice. Used when the directors decide rescue is the right call.
Qualifying floating charge holder
The lender (typically a bank with an all-assets debenture) appoints directly out of court.
Used when the bank wants its own choice of administrator, often where it has lost confidence in the directors.
The court
Any creditor, the company, or the directors apply for an administration order. Court hearing required.
Used when out-of-court routes are not available, or where a dispute about the appointment needs resolving.
Director appointment is the route we see most often in our caseload, and it is the cleanest if the company files the paperwork correctly. We work with the proposed administrator on the documents before any filing, because a defective Notice of Intention can void the appointment and force a court hearing the directors were trying to avoid.
How Company Administration Works
Appointment and the Moratorium
The administrator’s appointment becomes effective on filing. From that moment, the statutory moratorium freezes every creditor action against the company. No creditor can enforce a debt, commence or continue legal proceedings, or exercise a right of forfeiture without the administrator’s consent or a court order.
The Notice of Intention itself creates an interim moratorium of up to 10 business days, which gives directors a narrow window to file the appointment. This is the protective layer most directors come to administration for.
Statement of Proposals
Within 8 weeks of appointment, the administrator must send creditors a Statement of Proposals explaining what they intend to do with the company and how they plan to achieve the statutory purpose. Creditors can approve, modify, or reject the proposals at a creditors’ meeting or through a deemed-consent decision procedure.
Execution: Sale, Restructure, or Wind-Down
The administrator carries out the proposals: restructuring the business, negotiating with creditors, selling assets or the business as a going concern, or preparing for a transition to liquidation. During this period the administrator manages the company and makes every commercial decision.
Most business sales complete within the first few months. The remaining time is spent settling creditor claims and distributing any proceeds.
Exit From Administration
Administration ends in one of several ways: the company is rescued and returned to the directors’ control; a Company Voluntary Arrangement is proposed and approved; the business is sold and the company moves to creditors’ voluntary liquidation to distribute proceeds; or the company is dissolved if there are no assets to distribute.
Company Administration Costs and Timelines
Administration is the most expensive formal insolvency process. The fees come out of the company’s assets as an administration expense, ranking ahead of all creditor claims except fixed charges. The cost of the process therefore reduces what creditors recover.
Item
Typical figure
Notes
Administrator fees (straightforward case)
£15,000–£25,000
Single director, limited stakeholders, clean handover.
Administrator fees (complex case)
£30,000–£50,000+
Multiple stakeholders, property to sell, ongoing trading during administration.
Legal fees and disbursements
Variable, often material
Court fees, valuations, sale documentation.
Statutory maximum duration
12 months
Extendable by creditor consent (up to 6 months) or court order.
Typical actual duration
6 to 12 months
Most administrations resolve in this range; complex cases run longer.
Time to Statement of Proposals
Within 8 weeks of appointment
Statutory deadline.
Administration is only worth the cost if it achieves a meaningfully better outcome than immediate liquidation. Where the company has limited assets and no realistic prospect of rescue or sale, the administrator’s fees can consume most of what is available, and the creditors who were meant to benefit from the process end up with less than they would have recovered from a CVL.
What Happens to Directors During Company Administration
Your executive authority is suspended on appointment. The administrator controls the company’s affairs and you cannot exercise any management powers without the administrator’s consent. You remain a director on the register, but your practical role is to cooperate with us: provide information, attend meetings, and answer our questions about the company’s history.
The administrator may ask you to continue working in a limited capacity to assist with the transition, particularly where you carry technical knowledge or customer relationships that preserve the business’s value for us as we run a sale. That is at the administrator’s discretion, not yours, and the engagement terms are set by them.
From our caseload, the directors who handle this period best are the ones who treat it as a professional handover rather than a fight for control. The ones who fight tend to surface in the conduct review for non-cooperation; the ones who cooperate are more often left out of it entirely.
Your personal exposure as a director is assessed in the same way as in any other insolvency process. The administrator examines whether you traded when you should have stopped, whether you made preferential payments, and whether you maintained adequate records.
If administration transitions to liquidation, the liquidator picks up where the administrator left off, and the conduct review continues.
What Happens to Employees During Company Administration
Employees are not automatically made redundant when the company enters administration. The administrator decides whether to continue trading and retain staff.
Where employees are kept on, they are “adopted” by the administrator after 14 days under paragraph 99 of Schedule B1, which means their wages and certain other employment costs rank as an expense of the administration ahead of the administrator’s own fees.
If the administrator decides to make redundancies, employees can claim from the National Insurance Fund in the same way as in liquidation. If the business is sold as a going concern, the Transfer of Undertakings (Protection of Employment) Regulations 2006 may apply, transferring employees to the buyer on their existing terms.
Company Administration vs Other Insolvency Routes
Route
Best used when
Main trade-off
Related guide
Administration
Business has rescuable value or moratorium needed urgently.
Director loses control; fees consume creditor recoveries.
This page
Company Voluntary Arrangement (CVA)
Business is viable; the issue is restructuring debt across many creditors.
No automatic moratorium; a hostile creditor can force the issue.
Administration is the right route when three conditions hold:
The business has underlying value that would be destroyed by immediate liquidation. A trading operation with customer contracts, brand value, or specialist staff is the typical candidate.
Creditor pressure is too intense for informal negotiation or a CVA to hold. Where a winding-up petition is imminent or already filed, administration’s statutory moratorium is often the only protection that lands in time.
The expected outcome justifies the cost. Administrator fees of £15,000 to £50,000 only make sense where the rescue or sale recovery exceeds what a cheaper CVL would have produced.
If the company has limited assets, no realistic rescue prospect, and creditor pressure that can be managed through a CVL, administration is usually an expensive detour. If you are not sure where your company stands, take our 30-second insolvency test first to confirm the position before committing to a route.
What Directors Should Do Next About Company Administration
If a creditor has filed (or threatened) a winding-up petition, call a licensed IP today, not next week. Administration’s moratorium is most useful when there is still time to file.
Pull together the records the administrator will need: management accounts, board minutes, payroll, HMRC correspondence, BBL paperwork, and the customer ledger.
Identify what makes the business worth rescuing. Without a clear answer, administration is rarely the right route.
Do not file for administration without working with the proposed administrator on the paperwork. A defective Notice of Intention can void the appointment.
If administration is not the right route, the same call clarifies whether a CVA, CVL, or other procedure fits better.
The cases that go badly are rarely the ones where the director called a licensed IP too soon.
Related Guides
Company Liquidation: when administration is not the right route and closure is the answer.
Company Voluntary Arrangement: the lighter rescue route, where the business is viable but the debt structure is the problem.
Compulsory Liquidation: what happens if a creditor petitions before administration can be filed.
Frequently Asked Questions About Company Administration
How much does company administration cost?
Administrator fees typically start at £15,000 for a straightforward case and can exceed £50,000 for complex cases with multiple stakeholders, property to sell, or ongoing trading during the process.
Fees are paid from the company’s assets as an expense of the administration. Legal fees, valuation costs, and other disbursements are additional. The total depends on case complexity, the number of creditors, and whether the company continues to trade during administration.
Can the company survive administration?
Yes, although pure rescue is less common than directors hope. The first statutory purpose of administration is rescue: where the administrator can restructure the company’s affairs and return it to solvency, the company can emerge intact.
More commonly, the business is sold as a going concern (preserving jobs, contracts, and customer relationships) while the original company entity moves into liquidation to distribute the sale proceeds.
How long does company administration last?
The statutory maximum is 12 months from the date of appointment, extendable by creditor consent (up to 6 months) or court order. Most administrations resolve within 6 to 12 months.
Business sales often complete within the first few months. The remaining time is spent settling creditor claims and distributing any proceeds.
Do employees lose their jobs in administration?
Not necessarily. Employees are not automatically made redundant when the company enters administration. The administrator decides whether to retain staff. Employees kept beyond 14 days are “adopted” under paragraph 99 of Schedule B1, with enhanced payment priority over the administrator’s own fees.
If the business is sold, TUPE may transfer employees to the buyer. If redundancies are necessary, employees can claim from the National Insurance Fund.
What is the difference between administration and liquidation?
Administration tries to rescue the business or achieve a better return for creditors than immediate liquidation. Liquidation closes the company and distributes whatever can be realised.
Administration costs more, takes longer, and removes director control. Liquidation is faster and cheaper but does not preserve the trading operation. The right route depends on whether the business has underlying value worth saving.
Can directors be personally liable after administration?
The administrator examines director conduct in the same way a liquidator does: wrongful trading under section 214 IA 1986, preference payments under section 239, transactions at undervalue under section 238, and misfeasance under section 212.
If the administration transitions to liquidation, the liquidator picks up the conduct review. Personal liability does not depend on which procedure was used; it depends on what the director did before insolvency was suspected.
