Enforcement action: county court proceedings: administration orders: background
The purpose of an administration order (AO) is to enable a debtor to come to a formal agreement about payment of debts with all of his or her creditors. It has the general effect of dividing the judgment debtor’s assets between the creditors, in proportion to their claims, but gives HMRC no preferential rights.
While an AO is in force, a creditor cannot take enforcement action for a debt that is included in the AO without leave of the court.
The court may make an AO where a judgment debtor
- specifically applies for one [CCR Order 39, rule 2(1) of the County Court Rules 1981], or
- provides the court with a list of creditors and the amounts owing to each of them and the court decide to continue as if the debtor had applied for an AO [CCR Order 39, rule 2(2) of the County Court Rules 1981] or
- at an order to obtain information hearing under CPR71.
Before making an AO, the court will fix a date for hearing and notify all listed creditors to give them an opportunity to object.
Only debts that are due and payable on or before the date of the hearing, up to a maximum of £5,000 can be included in an AO.