You can put your company or limited liability partnership (LLP) into administration if it’s in debt and can’t pay the money it owes.
You’ll be protected from legal action by people or organisations who are owed money (‘creditors’) and nobody can apply to wind up your company during administration.
Administration can mean your company doesn’t have to pay all its debts in full - but your company can still be wound up.
Appoint an administrator
You must appoint an administrator - who must be a professional ‘insolvency practitioner’.
During administration you must hand over control of your company and everything it owns (its ‘assets’) to your administrator.
The administrator’s fees are paid by your company.
How administration works
The administrator will write to your creditors and Companies House to say they’ve been appointed - they’ll also publish a notice of their appointment in The Gazette.
Your administrator will try to stop your company being wound up (‘liquidated’). If they can’t, they will try to pay as much of your company’s debts as possible from the company’s assets.
Your administrator has 8 weeks to write a statement explaining what they plan to do.
They must send a copy to creditors, employees and Companies House and invite them to approve or amend the plans at a meeting.
The administrator could decide to:
- negotiate a Company Voluntary Arrangement (CVA) so your company can keep trading
- sell your business as a ‘going concern’ to another company - meaning your business can carry on, eg by keeping its clients, workforce or orders
- sell your assets as part of a creditors’ voluntary liquidation, pay your creditors from any money raised and close your company
- close your company if there’s nothing to sell
For as long as the company is in administration your administrator will run your business.
The administrator has control over your business during administration, eg they can cancel or renegotiate any contracts you have or make employees redundant.
When administration ends
Your company’s administration will end when either:
- the administrator decides the purpose of administration has been achieved, eg a CVA has been agreed with the creditors
- the administrator’s contract ends - this happens automatically after a year, but it can be renewed
You won’t have protection against any legal action your creditors take once administration has ended.