Administration
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Achieving better outcomes that liquidation
Martin and Tim were directors of a construction company although the shareholders of a holding company held the real power. These were increasingly difficult to contact and could not be persuaded to take any role in the company. Furthermore, the construction company relied upon the holding company for long-term finance but recently significant sums had been transferred to the holding company's accounts. Eventually, it became clear that the holding company was in financial difficulties because receivers were appointed and the shareholders disappeared abroad leaving Martin and Tim in charge of a sizeable company with a viable business employing 100 people but with no money. We identified that speed was crucial in this situation if something of the going concern could be saved. We sought the appointment of administrators to protect Martin and Tim and allow the business to be sold for best values without any retaliation from the holding company. After four weeks finding a buyer and negotiating a deal, the business was sold as a going concern to a national housebuilder. We subsequently used the powers of administrators to overturn the previous withdrawals that the holding company had made. The funds were distributed to creditors as part of the subsequent winding up of the company, which was done by way of a voluntary arrangement to avoid statutory liquidation costs.
"Administration is highly effective in stopping creditors in their tracks so you have the time to assess the current financial state and options.
Administration can save jobs and achieve better recoveries for creditors by allowing a more orderly disposal of assets
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