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Insolvency Guide UK

Guidance for directors under pressure

Important: This guidance relates to company insolvency in England and Wales.

What is company administration?

How administration works and when it may protect a business in England and Wales.

Insolvency optionsLast reviewed: 2026-04-11

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:

  1. Urgency is assessed
    Advice is taken on whether administration is realistic.

  2. An administrator is appointed
    Protection from creditor action usually takes effect.

  3. 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.

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