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Company going into administration

A company which is in financial difficulty may go into administration. An administrator is appointed to manage a company’s affairs whilst it is in administration. It usually continues to trade during the period of administration.

The function of the administrator is to fulfil several objectives:

1. •

   the first of these is to rescue the company as a going concern

2. •

   the second is to achieve a better result for the company’s creditors as a whole than would be likely if the company was wound up

3. •

   the third objective is to realise property in order to make a distribution to one or more unsecured or preferential creditors

Insolvency Act 1986, Sch B1, para 3

These are not a set of choices for desirable outcomes, but a hierarchy. The rescue of the company is the priority. The administrator will only actively pursue a better result for the company’s creditors on winding