Guides

Why do companies enter administration?

Common reasons businesses enter administration and the objectives an administrator may pursue.

Companies commonly enter administration after cash-flow pressure, loss of finance, declining sales, unexpected liabilities or creditor enforcement makes ordinary trading unsustainable. The administrator must pursue a statutory purpose and act in the interests of creditors as a whole. The process may result in continued trading, a business or asset sale, a restructuring, or a later liquidation. The precise circumstances and outcome differ in every case.