What are the outcomes of administration?
Every UK administration must aim at one of three statutory purposes, ranked in order. Understanding which purpose applies to a case tells you whether the company survives, the business survives, or only the bank walks away paid.
The corporate entity survives, usually via CVA or Part 26A restructuring plan alongside administration. Rare — under 5% of cases end this way — but the highest value outcome when achievable.
The business (not the entity) is sold as a going concern. Employees TUPE across, contracts assign, and unsecured creditors typically get a meaningful uplift on liquidation forced-sale value.
Where rescue is impossible, the administrator realises assets to pay the bank and preferential claims. Any surplus flows into the prescribed part for unsecured creditors.
Why the hierarchy matters
An administrator must, per Sch B1 para 3(3), pursue the highest attainable purpose. If (a) rescue is reasonably practicable — usually only if there is fresh capital and viable trading — they must attempt it before turning to (b). This is why proposals filed under para 49 always state which purpose applies and why.
In practice, the choice is heavily influenced by the secured creditor's position. A supportive bank willing to extend facilities enables (a) or (b); a bank calling in facilities usually forces (c). This is one reason the qualifying floating charge holder's rights (see QFCH rights) shape the outcome from day one.
Where each outcome typically exits
Purpose (a) — rescue: Administration ends with return of control to directors under Sch B1 para 79.
Purpose (b) — better outcome: Ends with move to CVL (para 83) or dissolution (para 84).
Purpose (c) — realise for secured: Ends with dissolution or CVL for residual estate.
See Exit routes from administration for the full mechanics.
Frequently asked questions
What are the three statutory purposes?
Set out in Sch B1 para 3(1): (a) rescue the company as a going concern; (b) achieve a better result for creditors as a whole than would be likely on liquidation; (c) realise property to make a distribution to secured or preferential creditors. They are hierarchical — (b) is only pursued if (a) is not reasonably practicable, and (c) only if (a) and (b) are both impossible.
How often is the company itself rescued?
Rare. Rescue of the company (not just the business) requires a CVA or restructuring plan to bind creditors and leave the corporate entity trading. Insolvency Service statistics show fewer than 5% of administrations result in return of control to directors as a going concern.
What does 'better result than liquidation' mean in practice?
Usually a business sale as a going concern — the administrator preserves customer contracts, employees and goodwill, then sells to a trade buyer. Compared to a break-up in liquidation, the going-concern price is normally significantly higher.
Is a pre-pack a good outcome?
It can be. A pre-pack (Sch B1 sale on or shortly after appointment) typically preserves jobs and delivers a better return than a break-up. It becomes contentious when the buyer is a connected party — see SIP 16 and the 2021 connected-party regulations.
What if realisation for secured creditors is the only option?
The administrator focuses on maximising realisations for the secured (and preferential) creditor. Unsecured creditors may still receive the prescribed part (up to £800,000) from floating-charge realisations.
Who decides which purpose applies?
The administrator, based on a review of the company's affairs immediately after appointment. The chosen purpose is stated in the proposals under Sch B1 para 49 and put to creditors.
What is the prescribed part?
A slice of net floating-charge realisations ring-fenced for unsecured creditors under s.176A IA 1986. Currently 50% of the first £10,000 and 20% of the excess, capped at £800,000 (raised from £600,000 in April 2020).
Do employees benefit from any outcome?
Yes. TUPE means employees transfer with the business on a going-concern sale. Where they don't transfer, they claim as preferential creditors for arrears (up to £800/each) and the balance via the Redundancy Payments Office.
How does administration compare to CVA on outcome?
A CVA can 'rescue the company' (statutory purpose (a)) while administration typically achieves (b) — rescue of the business, not the corporate entity. Directors who want to keep the company itself trading usually pursue a CVA — often with an administrator's support.
Where can I find UK outcome statistics?
The Insolvency Service publishes quarterly company insolvency statistics (with breakdown by administration, CVL, MVL, receivership, CVA). Historical outcome data — % moved to CVL, % dissolved, % returned — is in annual R3 studies.