-----Original Message-----
From: Peter Field [mailto:peter.field@hgfield.co.uk]
Subject: Administration orders
I would like to add to and correct the information that has been posted
about an administration order.
These are the facts.
Prior to the 1986 Insolvency Act a company that could not pay its debts
would be forced into liquidation. It was found that this was generally
detrimental to the creditors of the company.
Under the previous legislation there was no statutory mechanism which
summarily imposed a general moratorium on the rights of secured and
unsecured creditors whilst a scheme of arrangement or composition or other
rescue package was being worked out as an alternative to immediate
liquidation, which usually reduces the realisable value of assets and
proliferates liabilities. A rescue attempt could be undermined by a creditor
taking precipitate action resulting in the break up of the company, unless
the company had created a general charge and a receiver appointed thereunder
was able to preserve the viable parts of the business by a hive down or
otherwise.
Under this new procedure, which enables the court, in certain circumstances
to make an administration order and thereby put the affairs of the company
into the hands of a qualified insolvency practitioner, a creditor will be
subject to severe restrictions against 'stealing a march' over the other
creditors once an administration order has been applied for.
So, in summary, the administrator will look to do a deal with the creditors
to ensure the survival of the company. The ownership of the company will not
necessarily change as a result of the administration.
I suspect that more information will be forthcoming shortly.
If the administration order has already been effected then you should notice
that all invoices, orders or correspondence from Europa
include the name of the Administrator and a statement that the affairs,
business and property of the company are being managed by the administrator.
Peter Field
|