Administration

In England there are three entry routes into administration :

• By an order of the court,
• Appointment by a qualifying floating charge holder and
• Appointment by the company or its directors.

MGA will work with the directors to:

• Review the company’s financial position and commercial standing and to inform the directors if Administration is the right course of action.
• Ensure the appropriate and therefore most effective entry into administration is selected and explain why.
• Assess if it is feasible for the business to continue to trade during the administration and if by so doing, realisations will be enhanced.

An Administrator must perform his functions with the hierarchical objective of :

• Rescuing the company as a going concern, or;
• Achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration), or;
• Realising property in order to make a distribution to one or more secured or preferential creditors.

The Administrator must perform his functions in the interest of the company’s creditors as a whole.

Pre – Packs

A practice has developed – the pre-pack administration – where the insolvency practitioner who, it is intended will become the administrator, is involved with planning in advance a sale of the company’s business immediately after his appointment.  The pre-pack is most appropriate where the insolvency is such that the business can be sold for a better price or its nature is such that the business value would deteriorate during an administration.  Pre-packs have given rise to a degree of concern as creditors will usually have had no advance notice of the pre-arranged sale and no opportunity to have a say in the decision making process.  With effect from 2 November 2015, the case for a pre-pack sale where a connected party is involved should be reviewed by a “pre-pack pool”.  The aims of the pool are to increase the transparency of the pre-pack process in cases involving connected parties, and to provide assurance for creditors that independent business experts have review the proposed transaction.

MGA will ensure that connected parties considering acquiring a company’s business or assets through a pre-pack purchase are aware of their ability to approach the pre-pack pool.  The website at www.prepackpool.co.uk includes a number of anticipated questions and answers about the operation of the pool.