INS3217 - Company administration: exit routes from administration
Company Voluntary Arrangement or scheme of arrangement
The administration proposals might incorporate proposals for
- a company voluntary arrangement or a
- scheme of arrangement under the Companies Act 2006 or
- the further development and preparation of proposals for such arrangements
When the administrator has
- dealt with all the company’s property
- paid all costs
- made any distributions to creditors
the administrator must
- file a notice with the Registrar of Companies stating that the company is to be dissolved
- at the same time notify creditors that the administration has ended and the administrator has ceased to act.
The administration ceases on the date the notice is filed and the company will be struck off three months later.
If the company’s affairs cannot be dealt with in the 18 months of the 12 month administration period and the six month extension by creditor consent, it is likely that another form of insolvency such as liquidation or company voluntary arrangement will follow.
Creditors Voluntary Liquidation
To exit by liquidation an administrator
- simply files a form with the Registrar of Companies stating the intent to convert the administration to a creditors’ voluntary liquidation.
There is no meeting of creditors and the directors are not required to prepare a statement of affairs.
The liquidator is
- the person (who may be the administrator) nominated at a creditors meeting
- the person (who may be the administrator) identified in the proposals
- the administrator if the creditors have not expressed a preference or the proposals are silent about the liquidator’s identity.
Following a report to the court, it may make a compulsory winding up order.
Return the company to the directors
The administrator may cease to act without implementing any other insolvency procedure. When the administration ends the company has no protection from its creditors who may enforce their rights against any of its assets or put it into liquidation.
The administrator is only likely to return a company to its directors if the debts have been paid in full.