Part 6 – Powers of an administrator
March 2013
56.1.59 General power to manage
The administrator acts as the company's agent and has a general power to do anything necessary or expedient for the management of the company's affairs, business and property. An administrator has the same general powers as the company and/or its directors [Note 1]. This general power extends to the disposal of assets. The administrator does not have to seek approval of the creditors of his/her proposals before disposing of the company's property [Note 2].
56.1.60 Power over the existing management of the company
The administrator has the power:
The company, or its directors, cannot exercise any management power without the administrator's consent [Note 6]. The directors retain their duties under the Companies Act 2006 to keep accounting records and file accounts and returns. Part 10 of Chapter 75 provides further details of the director’s responsibility for filing documents with the registrar of companies.
56.1.61 Power to request supplies of gas, water, etc.
The administrator may request the supply of gas, electricity, water and telecommunication services during the period of the administration without being required to pay the outstanding charges as at the date of administration but may be required to provide a personal guarantee in respect of payment of future charges [Note 7].
56.1.62 Power to take control of the company's property
The court may order that a person holding property, books, papers or records which appear to belong to the company should surrender those items to the administrator [Note 8].
56.1.63 Power to enquire into the company's dealings
The officers of the company have a duty to provide information to the administrator [Note 9]. If an officer fails to cooperate the administrator may apply to the court for a private examination [Note 10] and to seek such orders as may be appropriate (see Chapter 23 for further information on private examinations) [Note 11].
56.1.64 Power to challenge antecedent transactions
The administrator can apply to court for an order to set aside transactions at an undervalue, preferences, extortionate credit transactions or transactions defrauding creditors to be set aside [Note 12]. Certain floating charges created within a year of the date the company entered administration may also be declared invalid [Note 13]. Further information on antecedent transactions can be found in Chapter 31.4A and 31.4B.
56.1.65 Power to deal with charged property – fixed charge
An administrator can dispose of property subject to a fixed charge without the consent of the owner or charge-holder with the permission of the court. The same applies to goods on hire purchase, conditional sale lease or retention of title agreement. The court will only grant permission where it thinks the sale would be likely to promote the purpose of the administration. The net sale proceeds must be used to pay the amount due to the secured creditor or the pre-sale owner, for example the hire purchase company. Where the sale price is below market value the court may order the difference to be met from administration funds [Note 14].
56.1.66 Power to deal with charged property – floating charge
The administrator has wide-ranging powers to deal with property subject to a floating charge without the consent of the charge-holder(s) or the court. However the sale proceeds, or any other property subsequently acquired, directly or indirectly, will remain subject to the floating charge and the holder shall have the same priority in the administration in respect of the acquired property as he/she had regarding the charged assets [Note 15].
56.1.67 Distribution to creditors
The administrator may make a distribution to creditors [Note 16]. The administrator may make payments to secured and preferential creditors without the permission of the court. The administrator requires the permission of the court to make a payment to all other creditors [Note 17]. Any distribution made should be in accordance with the Insolvency Rules 1986 [Note 18]. The administrator may make a payment without the agreement of the court, for example to secure future supplies or pay employees, if he/she thinks it will help achieve the purpose of the administration [Note 19].
[Back to Part 5 Effects of administration] [On to Part 7 The duties of an administrator]