Administration- what if extension isn't granted?
Discussion
This is just a question out of curiosity having done a bit of research into a company currently in administration. I noticed the insolvency practitioner was granted an extension to the period of the administration.
What happens if a court refuses to grant an extension period to a company in administration? Are the assets sent by court order to auction or something along those lines? Does another insolvency practitioner have to come in and deal with the company?
What happens if a court refuses to grant an extension period to a company in administration? Are the assets sent by court order to auction or something along those lines? Does another insolvency practitioner have to come in and deal with the company?
The Administration ends and the company goes back to directors (insolvent).
The directors can continue trading, but that's risky if it is insolvent, liquidate it, or file for another Administration.
A Court can retrospectively extend an Administration if it considers it's in best interests of creditors.
The directors can continue trading, but that's risky if it is insolvent, liquidate it, or file for another Administration.
A Court can retrospectively extend an Administration if it considers it's in best interests of creditors.
ModernAndy said:
Thanks. That's interesting. Presumably if a business has huge debts which don't get cleared during the administration process then the directors really have no choice but to have another IP involved or liquidate it themselves.
Yes because one of the worst things they can do is to continue trading something that's not a going concern. DSLiverpool said:
Alpinestars said:
Yes because one of the worst things they can do is to continue trading something that's not a going concern.
Which is illegal I believe ?A company can have an insolvent balance sheet, and I think Directors are protected if the company can meet its obligations as they fall due notwithstanding the balance sheet position.
This particular company I've been looking at owes 8 figures and has maybe £4,000,000 in realisable assets so a going concern it definitely ain't. The company owns a number of buildings but a great number of them are empty and have been for a long time. It's hard to decipher from the available data but it appears the company is still losing money.
ModernAndy said:
This is just a question out of curiosity having done a bit of research into a company currently in administration. I noticed the insolvency practitioner was granted an extension to the period of the administration.
What happens if a court refuses to grant an extension period to a company in administration? Are the assets sent by court order to auction or something along those lines? Does another insolvency practitioner have to come in and deal with the company?
No extension means that the purposes of the administration have not been fulfilled and have no real prospect of being fulfilled. The company would be put into insolvent liquidation by the administrator. What happens if a court refuses to grant an extension period to a company in administration? Are the assets sent by court order to auction or something along those lines? Does another insolvency practitioner have to come in and deal with the company?
Greg66 said:
ModernAndy said:
This is just a question out of curiosity having done a bit of research into a company currently in administration. I noticed the insolvency practitioner was granted an extension to the period of the administration.
What happens if a court refuses to grant an extension period to a company in administration? Are the assets sent by court order to auction or something along those lines? Does another insolvency practitioner have to come in and deal with the company?
No extension means that the purposes of the administration have not been fulfilled and have no real prospect of being fulfilled. The company would be put into insolvent liquidation by the administrator. What happens if a court refuses to grant an extension period to a company in administration? Are the assets sent by court order to auction or something along those lines? Does another insolvency practitioner have to come in and deal with the company?
Alpinestars said:
I don't think that is right. It's unusual not to get an extension unless there is some plan, eg a CVA has or will be agreed, or the company has been put on a solvent footing, eg Portsmouth FC. In the unusual circumstances where an extension has been missed or not granted, the company goes back to the Directors who will either run it or liquidate it. In this case where it appears the company is insolvent, it would be good to know why the extension was not granted - as it leaves the company in limbo.
The administration period in this case ends in the next couple of weeks but I don't see any proceedings having taken place to ask for an extension.ModernAndy said:
Alpinestars said:
I don't think that is right. It's unusual not to get an extension unless there is some plan, eg a CVA has or will be agreed, or the company has been put on a solvent footing, eg Portsmouth FC. In the unusual circumstances where an extension has been missed or not granted, the company goes back to the Directors who will either run it or liquidate it. In this case where it appears the company is insolvent, it would be good to know why the extension was not granted - as it leaves the company in limbo.
The administration period in this case ends in the next couple of weeks but I don't see any proceedings having taken place to ask for an extension.Alpinestars said:
Unusual for an Administrator not to have done this. I'd wait and see what happens as it can cause serious issues for the IP if he doesn't extend something he shouldn't have done, and unless he is satisfied his job is done, he would normally file for an extension.
I suspect they're on the ball. Previous extensions have been dated on the day the previous extension ended but the underlying paperwork is dated around a week before.Alpinestars said:
Greg66 said:
ModernAndy said:
This is just a question out of curiosity having done a bit of research into a company currently in administration. I noticed the insolvency practitioner was granted an extension to the period of the administration.
What happens if a court refuses to grant an extension period to a company in administration? Are the assets sent by court order to auction or something along those lines? Does another insolvency practitioner have to come in and deal with the company?
No extension means that the purposes of the administration have not been fulfilled and have no real prospect of being fulfilled. The company would be put into insolvent liquidation by the administrator. What happens if a court refuses to grant an extension period to a company in administration? Are the assets sent by court order to auction or something along those lines? Does another insolvency practitioner have to come in and deal with the company?
If there are mortgaged assets, they will be sold by the mortgage holder. Anything unsecured will be sold by the liquidator. Auction sales are relatively uncommon, TBH.
Alpinestars said:
That would be a pre-pack type transaction. The IP should be marketing the property and would have to get the best price for it. It may be that the best price is offered by the bank.
I can't see the bank buying these properties. They're already owed at least what the buildings are worth and there's loads of unoccupancy so it's not a prime area. It will certainly be interesting to see what happens.Gassing Station | Business | Top of Page | What's New | My Stuff