Part 2 – Appointment of an administrator by the court

March 2013  

56.1.16 Who may apply for an administration order

An application for an administration order may be made by:

• the company,
• the directors of the company,
• one or more creditors of the company (including contingent or prospective creditors),
• the designated officer for a magistrates’ court in respect of fines imposed on a company under section 87A of the Magistrates’ Court Act 1980,
• a combination of the parties listed above [Note 1],
• the supervisor of a voluntary arrangement [Note 2],
• the Financial Services Authority [Note 3], or
• the Secretary of State in those companies with modified administration procedures (see paragraph 56.1.11).

56.1.17 The application for an administration order

An application to court for an administration order must be in the prescribed form (Form 2.1B) supported by a witness statement (see paragraphs 56.1.18 to 56.1.19) [Note 4]. Both documents must be filed at court and served on the following:

• any person who has appointed an administrative receiver of the company,
• any person who is or may be entitled to appoint an administrative receiver of the company, and
• any other person who may be prescribed [Note 5].

Other prescribed persons include a supervisor of a voluntary arrangement, the company if the application is made by another company or person, the proposed administrator, any member State liquidator appointed or, if there is a pending petition for the winding-up of the company, the petitioner and provisional liquidator (if appointed) [Note 6]. As soon as possible after the filing of the application the applicant should file notice with any enforcement officer or other person charged with an execution or other legal process against the company or its property or on any person who as distrained against the company or its property [Note 7].

56.1.18 Witness statement in support of the application

The witness statement must contain, amongst other things:

• a statement that the applicant believes the company is, or is likely to become, unable to pay its debts (see paragraph 56.1.19 for the only exception),
• details of any secured creditors and which creditors, if any, have the right to appoint an administrative receiver,
• details of any insolvency proceedings, including any winding-up petitions,
• the function of the administrators were more than one is appointed,

and any other matters the applicant believes will assist the court in considering the application [Note 8].

56.1.19 Witness statement by the holder of a qualifying floating charge

Where the holder of a qualifying floating charge is the applicant, the witness statement does not have to contain a statement that the applicant believes the company is, or is likely to become, unable to pay its debts (see paragraph 56.1.18). The witness statement should provide sufficient details to satisfy the court that the applicant is entitled to appoint an administrator under the Insolvency Act 1986 [Note 9].

56.1.20 The hearing

The court may make the administration order, dismiss the application, make an interim order or treat the application as a winding-up petition. Where an interim order is made the court may impose restrictions on the powers of the directors of the company [Note 10]. If the court treats the application as a winding-up petition no deposit would be paid.

56.1.21 Conditions for making an administration order

The court may make an administration order only if it is satisfied that: 

• the holder of a qualifying floating charge is satisfied the applicant could appoint an administrator whether or not the company is, or is likely to become, unable to pay its debts [Note 11], or
• the company is, or is likely to become, unable to pay its debts, and the order is reasonably likely to achieve the purpose of the administration (see paragraph 56.1.3) [Note 12].

56.1.22 The rights of the holder of a qualifying floating charge

The holder of a qualifying floating charge may intervene where an application to appoint an administrator is made by a person other than them. The holder of the qualifying floating charge may apply to the court to have a named person appointed as administrator other than the applicant’s nominee. The court will grant this application unless it thinks, in the particular circumstances, it right to refuse [Note 13].

56.1.23 Where the official receiver is provisional liquidator

Where the official receiver is provisional liquidator he/she must be served with a copy of the administration application [Note 14] and should ensure that he/she is present or legally represented at the hearing. If an administration order is made the official receiver, or his/her representative, should obtain directions from the court on how to proceed under the order by which he/she was appointed as on the making of the administration order the winding-up petition will be discharged.

56.1.24 When the appointment of the administrator takes effect

The appointment of the administrator takes effect from the time specified in the administration order, or where no time is specified on the order, when the order is made [Note 15].

56.1.25 The administrator must publicise his/her appointment 

The administrator, for the period of the administration, must include his/her name and state that the company's affairs and property are being managed by him/her on every business document issued and on all the company's websites. The business documents include invoices, orders, letters, etc. and include those issued by, or on the behalf of, the company or administrator [Note 16].

[Back to Part 1 What is administration?] [On to Part 3 Appointment of an administrator by the holder of a qualifying floating charge]