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Administration - often viewed negatively but is this unfair

Published: 30/10/2018

Understanding the benefits and purposes of an Administration when comparing it to other procedures can be challenging for those new to insolvency. However, as a general overview an Administration is often a valuable tool for those businesses that are in financial difficulties and where preservation of the business and a sale of the business and assets as a going concern will represent the best outcome.

This contrasts to a scenario in which you may have a struggling business where the preservation of the business as a going concern will not have much benefit or achieve a significant enhancement in any sale value and a Liquidation may be more appropriate.

A recent high profile example is that of Force India F1 team. Although the initial outcome expected could not be achieved due to the circumstances it nevertheless resulted in a positive outcome for stakeholders.

The business and assets were sold to a group of investors which enabled the team to continue the F1 season. With no reported job losses it is understood that jobs were preserved and the Administrators achieved significant value from the sale which should enable creditors to be paid in full.

Onwards and upwards for Force India who will hopefully be starting next season on the front foot. Perhaps they can challenge the great and now 5 times F1 Championship winning Lewis Hamilton!

If you or your clients are struggling financially then in the right circumstances an Administration could be the best course of action. If so, please contact our offices on 020 8661 7878 or by email on insolvency@turpinba.co.uk