What is company administration?
How administration works and when it may protect a business in England and Wales.
Published by Hedwyn Ltd. General information for directors of companies registered in England and Wales.
Short answer
Administration is a formal insolvency process that can protect a company from creditor action while options are assessed. It is often used where there is still a viable business or where a better outcome may be achieved than immediate liquidation.
Plain-English explanation
Administration is designed to create breathing space. Once a company enters administration, there is usually a legal moratorium that restricts creditor action while the administrator takes control of the process.
It may be used to:
- rescue the company as a going concern
- achieve a better result for creditors than liquidation
- realise assets in an orderly way
Administration can be helpful where creditor pressure is intense but there is still something worth preserving, such as contracts, customers, or a sale opportunity.
It is not a light-touch option. It is a formal insolvency process involving an insolvency practitioner and loss of day-to-day control.
Why this matters for directors
Administration may preserve value that would otherwise be lost if the company simply collapsed into liquidation.
This matters because:
- urgent creditor pressure can destroy viable businesses quickly
- administration can create time to assess rescue or sale options
- directors do not remain in normal control once the process begins
- using it too late may reduce its usefulness
Directors should see administration as a strategic protective process, not just a pause button.
What to check now
Directors should review:
- whether creditor action is becoming urgent
- whether the underlying business is still viable
- whether a sale, rescue, or restructuring is realistic
- whether cash, contracts, and staff can be preserved
- whether liquidation would produce a worse outcome
What usually happens next
Typically:
-
Urgency is assessed
Advice is taken on whether administration is realistic. -
An administrator is appointed
Protection from creditor action usually takes effect. -
A rescue, sale, or controlled outcome is pursued
The aim is to preserve value or deliver a better result than liquidation.
If no viable outcome exists, the company may still move into liquidation later.
Related guidance
This guide is general information, not legal, financial, accounting or insolvency advice. See how our content is prepared.