DMBM676630 - Summary Proceedings (Sc): Company Administration Orders

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This procedure modifies company administration orders (CAO’s) and will in timereplace most Receiverships. It is extremely flexible and convenient to use andadministrators will have a wide range of powers.

It is anticipated that the administration will last up to 12 months or 18 months byagreement with the creditors or, exceptionally, longer by application to the court.

The expectancy is that the exit route from administration will be determined within threemonths so that the duration of these administrations will be much shorter than traditionalinsolvencies.

There are three principal exit routes

  • company voluntary arrangements
  • liquidation

and

  • company dissolution with or without a distribution.

There is concern that because of the inbuilt flexibility administration may be abusedwhere phoenixism is involved and Section 98 creditors meetings are held. Thus as this newprocedure becomes established it may well be that administrations will eventuallyoutnumber liquidations.

Also there is scope for creditors (including HMRC) to seek the appointment of anadministrator in place of the traditional company winding up petitions.

Enforcement and Insolvency Services Edinburgh is responsible for the setting up andlodging of claims (the processing side) for company administration cases and also for thetechnical aspects where HMRC debts are concerned.

Debt management office - preliminary procedures

Once a notice of intention to appoint an administrator is filed at court, iteffectively prohibits instituting or continuing any legal process either against a companyor against the property of a company.

Where you become aware that such an application has been made it will be necessary to haltany proceedings started but you should not at this stage withdraw the case. Ifsubsequently an administrator is not appointed you should continue the action.

Action to take where administrator appointed

Once you have been informed that an administrator has been appointed you mustnot start any new proceedings against the company.

If you have already commenced proceedings when you are notified that an administrator hasbeen appointed you must

  • ask the court immediately to suspend the action

and then

  • take action as in INS2.107.