Company Status - Administration

What does going into administration mean?

When a company is in administration, a specialist firm have been appointed by the Court to manage the affairs of a company and recover as much cash as possible. This cash is distributed to creditors of the business, and sometimes also customers. The most likely outcome of administration is that assets of the company will be collected and distributed to creditors. There is a hierarchy in terms of who gets paid first:

  • The Administrators - this is how they make their money
  • Creditors – for any money secured on assets or property of the company
  • Employees, redundancy pay and wages
  • Anyone else owed money by the company, including customers. 

In order to recover the cash, the administrating firm can keep the business running, known as a ‘going concern’. This means that the company keeps running without the threat of liquidation for around 12 months, though the long term prospects of the company are still doubtful.

Will I get my money back?

‘ Going concern’ may allow a refund or product A company in administration cannot provide goods or services, but it may not be closed completely. An administrator is looking to get the maximum value out of a company when selling it, therefore if it is in the best interests of the company to keep trading, even if only to sell later, that is what will happen. If the company is a going concern then those owed may simply be issues with a refund or the product owed to them.
Company not a going concern If this is the case then an application to the administrators to get your money back will need to be made. Those who have applied for money back will be credited in the order listed above. Unfortunately, even if you receive money back from the administrators, it is often unlikely to be the entire amount owed.

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