What is administration? UK company administration, explained in plain English
Administration is a formal UK insolvency process, governed by Schedule B1 of the Insolvency Act 1986, in which a licensed insolvency practitioner (the administrator) is appointed to take over a company. Their statutory job is to try, in this order, to rescue the company as a going concern, to achieve a better result for creditors than liquidation, or to realise property to pay a secured or preferential creditor. From the moment they are appointed, an automatic moratorium blocks most creditor action against the company — enforcement, repossession, winding-up petitions, lease forfeiture — buying the administrator room to plan.
The legal basis, in one paragraph
Administration was rewritten by the Enterprise Act 2002, which inserted Schedule B1 into the Insolvency Act 1986. Schedule B1 defines who can appoint an administrator, what powers they hold, the moratorium that follows appointment, and the three statutory purposes. Procedural detail sits in the Insolvency (England and Wales) Rules 2016. The Corporate Insolvency and Governance Act 2020 added a separate 20-business-day "standalone moratorium" that is not administration but is often confused with it. In Scotland and Northern Ireland the same primary statutes apply with local rule sets. This page uses English and Welsh terminology throughout.
The three statutory purposes (in this order)
Schedule B1 paragraph 3 requires the administrator to pursue the highest achievable objective. They cannot pick their favourite — they must justify to creditors and the court which purpose applies and why the higher one was unattainable.
Rescue as a going concern
Keep the whole company alive — often via a CVA, refinancing or restructuring — so it exits administration still trading, with its debts compromised. The gold-standard outcome; rare in practice.
Better result for creditors than liquidation
Sell the business and assets as a going concern (with jobs and goodwill preserved) so unsecured creditors receive more than they would in a break-up liquidation. This is what most administrations actually achieve.
Realise property for a secured/preferential creditor
Where the first two are impossible, sell the assets in the best order to pay the bank, HMRC and employees. The administrator must still consider unsecured creditors' interests where practicable.
Who does what in administration
| Role | Powers | Duties owed to |
|---|---|---|
| Administrator | All management powers. Can trade, sell, borrow, litigate, dismiss staff, appoint agents. | Creditors as a whole. Must act in good faith and pursue the statutory purposes. |
| Directors | None over the company. Must hand over records, sign statement of affairs, answer questions. | Cooperate with the administrator. Personal liability if they hide assets or continue trading. |
| Court | Grants administration orders, extends appointments, resolves creditor challenges, sanctions sales. | Public interest and correct application of the Insolvency Act 1986. |
| Secured creditors | Cannot enforce during moratorium without permission. May appoint the administrator themselves. | None to the company; entitled to be paid from their charged assets first. |
| Unsecured creditors | Vote on the administrator's proposals. Can challenge conduct via the court. | None; entitled to the prescribed part and any surplus. |
A worked example
Imagine Anvil Manufacturing Ltd, a Midlands engineering firm with 60 staff, £8m turnover, and a £1.2m HSBC overdraft secured by a fixed and floating charge. HMRC has issued a winding-up petition for £180k of unpaid VAT and PAYE. The directors know a competitor has been sniffing around the order book.
The directors, guided by insolvency counsel, file a notice of intention to appoint an administrator. The moratorium kicks in the moment the notice is filed. HSBC — the qualifying floating-charge holder — consents, and a licensed insolvency practitioner is appointed the following business day.
The administrator retains 45 of the 60 staff, keeps trading the profitable production line for four weeks, and runs a compressed sale process. The competitor offers £2.4m for the trading business and 45 jobs; a break-up liquidation would raise £1.6m and save none. The administrator sells to the competitor (Purpose 2 — better result for creditors). HSBC recovers its £1.2m in full. Preferential HMRC (VAT and PAYE) recovers ~£120k. Ordinary unsecured trade creditors receive 7 pence in the pound out of the prescribed part. Anvil Manufacturing Ltd moves to CVL and is dissolved 14 months later.
What administration is — and isn't
- • A statutory rescue and realisation process, court-supervised.
- • Run by a licensed insolvency practitioner regulated by an RPB.
- • Time-limited: 12 months by default.
- • Public: filings appear at Companies House and in The Gazette.
- • A moratorium against most enforcement action.
- • The same as liquidation. Liquidation ends the company; administration tries to save it.
- • "Bankruptcy" — in the UK bankruptcy is for individuals only.
- • A CVA. A CVA is an agreement with unsecured creditors; administration is a legal process.
- • Confidential. Every step is a matter of public record.
- • Something directors can walk away from — cooperation is a statutory duty.
Where the numbers come from
- The Gazette — statutory notice of every appointment, extension and exit, published within days of the event.
- Companies House — filings under form AM01 (appointment), AM02–AM05 (progress), and related charge/insolvency filings.
- Insolvency Service — quarterly and annual statistics for England, Wales and Scotland, published on GOV.UK.
- Sell Ltd's live monitor at /administrations ingests all three feeds hourly.
Wondering if administration applies to a specific company?
Give Chris the company name or number. He'll pull Companies House and Gazette filings, flag any charges or petitions on record, and explain what stage the company is at — free.
Chat with ChrisAdministration — frequently asked questions
What is administration in simple terms?
Administration is a formal UK insolvency process where a licensed insolvency practitioner is appointed to take over a struggling company. Their job is to try to rescue it, sell it as a going concern, or realise its assets for creditors — while the law protects the company from most legal action.
What law governs administration in the UK?
Schedule B1 of the Insolvency Act 1986 (inserted by the Enterprise Act 2002), plus the Insolvency (England and Wales) Rules 2016 and — for the standalone moratorium — the Corporate Insolvency and Governance Act 2020. Scotland has parallel provisions in the same statutes.
Who can put a company into administration?
Three parties can appoint an administrator: (1) the company or its directors, out of court; (2) a qualifying floating-charge holder, out of court, on the same day it files; or (3) the court, on the application of the company, directors, creditors, or the supervisor of a CVA.
What are the three statutory purposes of administration?
In this priority order under Schedule B1 paragraph 3: rescue the company as a going concern; achieve a better result for creditors as a whole than liquidation would; or realise property to pay a secured or preferential creditor. The administrator must pursue the highest achievable objective.
What is the moratorium in administration?
An automatic legal freeze that begins the moment the administrator is appointed. Winding-up petitions cannot proceed, creditors cannot enforce security or repossess goods, and landlords cannot forfeit leases — unless the administrator or court gives permission. It buys the administrator time to plan.
How long does administration last?
One year automatically, extendable by up to a year with creditor consent (or indefinitely by court order). Most administrations conclude within 3–9 months via a sale, CVA, or a move to liquidation.
Does the company keep trading in administration?
Usually yes, at least at first. Continuing to trade preserves value for a going-concern sale. The administrator decides day-by-day whether trading remains viable and whether individual contracts, sites, or staff should be retained.
Do directors keep their jobs?
Directors remain in office but lose their powers. The administrator makes all management decisions. Directors must cooperate fully — hand over records, attend interviews, sign a statement of affairs — or face personal liability and disqualification proceedings.
How does administration end?
One of four ways: (1) automatic dissolution if there is nothing left to distribute; (2) move to Creditors' Voluntary Liquidation; (3) exit into a CVA; or (4) court order. The administrator files a final report at Companies House on exit.
Is administration the same as bankruptcy?
No. In the UK, 'bankruptcy' applies to individuals and 'insolvency' or 'administration' applies to companies. The US uses 'Chapter 11 bankruptcy' as the closest analogue to UK administration.
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ReadLast updated 1 January 1970. Written by Chris at Sell Ltd. This page is educational and does not constitute legal advice — speak to a licensed insolvency practitioner about your specific situation.