Entering Administration brings a halt to any legal proceedings brought against a company.

The prevention of further decline of the financial position of a company. This not only gives protection for the core business but reduces the risk of directors opening themselves up to a potential wrongful trading action.

Administrators must be licensed insolvency practitioners and as such are heavily regulated. Their conduct and any actions taken by them are dictated by a strict code of conduct.

The Administrator is duty-bound to work for the benefit of all creditors (including unsecured).

The restructuring of the company is an option. The Administrator has the opportunity to dispose of non-profitable parts of the business and sell the valuable parts of the company. Therefore, the business may continue trading and maintain employment for the employees. On occasion, it is necessary for jobs to be made redundant, to ensure the commercial viability of the company.

Where the company cannot afford to pay employees redundancy payments, claims can be submitted to the National Insurance Fund. This is a government fund managed by The Redundancy Payments Service.

Entering Administration means directors have to relinquish control of their Company. They may face redundancy through the sale of the business to a 3rd party.

The selling off of Company assets to third parties.

After instigating, Administration is a process that becomes publicly available information. Most notably, the informing of Creditors and any correspondence including the Company website, emails and purchase orders must state the Company is in Administration.

During the life of Administration, the raising of all purchase orders must go through the approval of the Administrator.

There must be an advertisement of the appointment of an Administrator in the London Gazette and local/national newspaper.

Any Creditor holding a qualifying floating charge (often a factoring Company or bank) can appoint an Administrator of their choosing.

The costs associated with Administration can be high and escalate very quickly if trading the Company.

All the business and assets may be sold to the current owners/directors or a 3rd party. In this case, the current employees may transfer to another entity under TUPE (transfer of undertaking) laws.

This can cause problems especially if the Company needs to cut employment costs to ensure future survival