Placing a company into Administration usually occurs in circumstances where a company is struggling financially, however the directors believe that with a little less pressure from creditors and with some guidance for a third party, the company could remain solvent. Voluntary administration occurs when the directors resolve to appoint a voluntary administrator to the company.
The administrator essentially “steps into the shoes” of the directors and controls the company’s dealings from that point on.
The administrator’s role is to conduct investigations into the company’s position and provide options for the company’s future.
Options which can be provided by an administrator can include:
- Entering into a deed of company arrangement.
- Placing the company into liquidation.
- Ending the administration and handing he control of the company back to the directors.
Voluntary administration is usually advised in less dire circumstances as it allows time for the company to consider its options for the future, which may result in avoiding liquidation, whereas liquidation is focused on bringing the company to an end.
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