15.7 Process of administration

15.7 PROCESS OF ADMINISTRATION

A general outline of the key steps involved:

1. Appointment of the administrator:
2. Decision to appoint: The decision to appoint an administrator can be made by the company’s directors, creditors, or the court.
3. Notice of intention: In some jurisdictions, the company or its directors may issue a Notice of Intention to Appoint an administrator. This notice provides a legal protection period during which no legal action can be taken by creditors to enforce their claims against the company.
4. Formal appointment: The administrator is formally appointed through the directors’ appointment, creditors’ appointment, or court appointment process, as explained earlier.
5. Investigation and assessment:
6. Initial assessment: The administrator conducts an initial assessment of the company’s financial position, operations, and prospects.
7. Investigation: The administrator undertakes a detailed investigation into the company’s affairs, reviewing financial records, contracts, and other relevant documents.
8. Statement of affairs: The administrator prepares a Statement of Affairs, which provides a comprehensive overview of the company’s assets, liabilities, and creditors.
9. Formulation of proposals:
10. Development of a plan: Based on the investigation and assessment, the administrator develops proposals and plans to achieve the objectives of administration.
11. Proposal for creditors: The administrator prepares a formal proposal outlining the proposed treatment of creditors’ claims, the expected financial outcome, and the administrator’s recommendations for achieving the objectives of administration.
12. Communication and meetings:
13. 6. Reporting and compliance:
    7. Reports to stakeholders: The administrator prepares and submits reports to the court, creditors, and regulatory authorities, providing updates on the progress of the administration, financial information, details of asset realizations, and the distribution of funds to creditors.
    8. Compliance with legal requirements: The administrator ensures compliance with all relevant legal and regulatory requirements, including court orders and insolvency laws applicable in the jurisdiction.
       5. Implementation:
       6. Execution of the plan: If the proposals are approved by the creditors, the administrator implements the approved plan, which may involve restructuring debt, selling assets, renegotiating contracts, or pursuing other actions to achieve the objectives of administration.
       7. Realization of assets: The administrator sells or disposes of the company’s assets to generate funds for the benefit of creditors. This may involve negotiating sales, conducting auctions, or pursuing legal action to recover assets or funds owed to the company.
          1. Creditors’ meetings: The administrator convenes meetings of the company’s creditors to present the proposals, allow creditors to vote on the proposals, and seek their approval. Communication with stakeholders: The administrator communicates with the company’s creditors, shareholders, employees, and other stakeholders to provide updates on the administration process and seek their input.
    7. Conclusion of administration:
    8. Exit from administration: Once the objectives of administration are achieved, the administrator concludes the administration process.
    9. Handover or winding up: Depending on the circumstances, the administrator may hand back control of the company to the directors, facilitate a transfer of ownership, or commence the process of winding up the company.