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What Happens to Employees, Creditors, and Shareholders?

When a company goes into administration, it can be a confusing and worrying time for employees and shareholders. This article will provide an overview of what happens when a company goes into administration and what the main objectives of the process are. We will also discuss the roles of the key players in company administration.

The first thing to understand is that when a company goes into administration, it is still a going concern. This means that the company will continue to trade and its employees will remain employed. The key objective of the administration is to rescue the company as a going concern. This means that the administrator will try to keep the company trading and avoid liquidation.

What are some ways an administrator might achieve this?

One of the ways that administrators achieve this is by selling off parts of the business. This may involve selling assets such as property or plant and machinery. It may also involve selling the business itself as a going concern. Another way that administrators can keep a company trading is by renegotiating contracts with suppliers. This can help to reduce costs and improve cash flow.

Once the administrator has stabilised the company, they will then look to sell it as a going concern. This may involve finding a buyer for the business or taking it public through an initial public offering (IPO). The administrator will also work with creditors to agree a repayment plan. This is known as a Company Voluntary Arrangement (CVA).

What is the main objective of going into administration?

The key objective of administration is to rescue the company as a going concern. This means that the administrator will try to keep the company trading and avoid liquidation.

What happens once the company is stabilised?

Once the administrator has stabilised the company, they will then look to sell it as a going concern. This may involve finding a buyer for the business or taking it public through an initial public offering (IPO). The administrator will also work with creditors to agree a repayment plan. This is known as a Company Voluntary Arrangement (CVA).

Who are some of the key players involved in company administration?

The key players in company administration are the administrator, employees, creditors, and shareholders. The administrator is appointed by the court and their role is to rescue the company as a going concern. Employees remain employed during administration and their rights are protected by law. Creditors are owed money by the company and they have certain legal rights. Shareholders own shares in the company and they may be able to vote on the sale of the business.

If you are an employee, creditor, or shareholder of a company that has gone into administration, it is important to seek professional advice to understand your rights and what options are available to you. This is a general overview of what happens when a company goes into administration. If you are affected by this process, it is important to seek professional advice. Administration can be a complex process and the outcome will depend on the specific circumstances of each case. Irwin Insolvency can help you if you are affected by company administration.