The advantages of receivership are that a bank can take over where directors may have lost control and the receiver has the power to act swiftly to save the business. Moreover, the receiver may repay the debts to the preferential creditors. However, from the company's perspective, the company is not often saved in its existing form, as its assets will be subject to "meltdown" and sold at a very low price. From the creditors' perspective it is improbable that any unsecured creditors will be repaid. Receivership can be very expensive and the bank has to pay the receiver's costs.
From what we have seen, it can be argued that if a company enters into receivership it has a chance to avoid liquidation, or at least produce better dividends for some of the creditors with the sale of the financially healthy parts of the company. Therefore, as long as receivership has a chance of success, it is (was) an option for the companies to consider rather than directly following the route of liquidation.
With the enactment of the Enterprise Act 2002, the receivership regime was for most purposes abolished and the new ‘administration’ procedure was introduced.
The reason for this is because there were many complaints that receivership vested too much power in the hands of one creditor, the floating chargeholder. Critics argued that, as a result of their secured status, these creditors lacked the motivation of saving failing companies and failed to take into consideration the interests of the other creditors. The domino effect is that the appointment of a receiver may perhaps produce a lesser return for those creditors than a collective proceeding (e.g. administration to be considered further below). ‘The fact that a receiver's primary duty is owed to the appointing creditor rather than creditors in general is also perceived as unfair.’
In contrast, ‘administration’ provided that administrators should consider and protect the interests of the creditors as a whole. The substitution of receivership signals the death of a system under which a single creditor’s rights could possibly direct the resolution of insolvency procedures. Due to its abolishment, receivership will not be considered in further detail but instead we are going to focus on the new favoured action for insolvent companies; ‘administration’.
ADMINISTRATION
Administration is known as a ‘shelter regime’. The fundamental idea behind administration was to give companies faced with insolvency ‘a breather’ from the creditors, in order to see if a way can be found to rescue it. The administration regime was introduced by the Insolvency Act 1986. The Cork Report stated that there are ways in which a company could be rescued (by appointing a receiver). However, unsecured creditors and chargeholders who did not hold a floating charge over the whole or substantially whole of the company’s assets could not appoint a receiver. Therefore, administration was introduced to fill this gap and following the changes made by the Enterprise Act 2002, ‘administration is the preferred insolvency procedure for debenture holders.’ The debenture holder or the directors of the company can now appoint administrators out of court, thus, avoiding the costly and time-consuming obtainment of a court order (courts can still appoint administrators but usually this is done out of court).
Under the new regime, administration replaced administrative receivership and it is now the only option for debenture holders. The new regime states that the primary purpose of administration is to rescue the company. Sch.B1, Para.3 of the Insolvency Act 1986 lays out the purposes in order of primacy; the appointed administrator must act with the purpose of: “(a) rescuing the company as a going concern, or (b) achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration), or (c) realising property in order to make a distribution to one or more secured or preferential creditors.”
As stated above, the administrator must consider the interests of the creditors as a whole, when exercising the above judgement. The decision of the administrator must be viewed on a subjective basis i.e. what does the administrator think as being achievable, rather than what a reasonable administrator should have thought.
Where the business is sold thus leaving the company as an empty shell does not represent a rescue of the company. ‘One could question the wisdom of giving primacy to the survival of the company rather than to the survival of the business as a going concern.’ Rescue of the company is achieved in only a small percentage of administrations and most administrators favour objectives (b) and (c) of para 3. This is because it is more probable to get more money for the creditors from a quick sale of the company than following a lengthy and costly rescue package. Objective (c) can be followed even if there is only enough money to pay off some of the secured and preferential creditors, hence, ‘owing a duty to the creditors as a whole would be nonsense’ as unsecured creditors would have no interest in the administration’s outcome. However, the administrator must not needlessly harm the interests of the creditors.
Administration is not a reorganisation procedure but somewhat acts as a momentary instrument to keep the business as a going concern under external management until a decision as to the best exit route can be taken, which could be a company voluntary arrangement under the Insolvency Act, or an arrangement or compromise under the Companies Act (all to be considered further below). The most frequent purpose of administration achieved in practise, is a more beneficial realisation of a company’s assets than would be effected in a liquidation.
The vital and distinguishing feature of the administration order procedure is the moratorium imposed on actions against the company. The rights of any third parties against the company are not removed but they are simply prevented from enforcing those rights whilst the company is in administration. This in effect, makes it impossible for a resolution to wind up a company to be passed or a winding-up order to be made (unless it is in the public interest but not to be considered in this text). Subsequently, the administrator can take measures to rehabilitate the company, or to protect the important parts of the business with the aim of a sale as a going concern.
Moreover, the purpose of administration may be disturbed in a number of ways.
The moratorium feature of administration has generated so many proceedings because it disturbs recognized property and security rights. Sadly, as it is a new piece of legislation there are still doubts as to the scope of the moratorium. However, it is important to note that the courts have generally resolved cases in ‘favour of promoting the collective good,’ regardless of the respected property rights.
Furthermore, we will briefly consider the rise of what is called a ‘pre-pack’. This device is a procedure in which a troubled company and its creditors come to an agreement in advance of statutory administration procedures. The pre-pack establishes a deal, before the appointment of an administrator, thus, allowing statutory procedures to be implemented very quickly. This poses the danger that in such cases the interests of less powerful creditors (mainly unsecured creditors) will not be considered adequately, if at all. Moreover, in a pre-pack there is no intention of presenting a proposal to the creditors or even considering a possible rescue plan through administration, therefore, many commentators argue that this is a gigantic disadvantage. The Parliament did not foresee pre-packs and Parliamentary debates state that the reforms effected by the Enterprise Act 2002 to administration were intended to be used in a different approach and aim from the pre-packs; mainly to rescue the company rather than making an agreement for its sale prior to entering administration.
The concept and function of administration is in many ways different from liquidation. The main aim of administration is to rehabilitate the company and restore it to financial health. Where it is impossible to avoid liquidation, administration deals with the business in an approach to gather better returns for the creditors than what would be the case with liquidation. From what we have seen, it is clear that administration has numerous advantages over liquidation in aiding to achieve the objectives mentioned above. To begin with, a liquidator can only carry on trading for the purposes of an advantageous winding up, but administrators are allowed to trade without restrictions and proceed to the sale of the business and its assets as a going concern. Also, the moratorium effect of preventing the secured creditors from enforcing their rights, significantly helps the company to continue trading on a going concern and in effect the value of the company’s assets would be higher than what it would have been under liquidation. This ‘freezing’ of actions against the company makes it a lot easier to come to an arrangement with the creditors (to be considered further below) than what would be the case on a winding up.
“It is generally accepted that saving the business alone (combined with the greater speed and easier control of the process) is a sufficient reason for using administration. Certainly for many cases where any discontinuity is to be avoided and there may be complex contractual issues that can be better managed and results substantially enhanced in administration, then the merits of administration over liquidation are clear.”
COMPANY VOLUNTARY ARRANGEMENT (CVA)(FORMAL ARRANGEMENTS)
To continue, we are going to look at CVAs. The Cork Committee recommended that it should be possible to reach a collective agreement with the creditors even if not all the creditors (minority) agree with such an arrangement. The CVA was therefore introduced by the Insolvency Act 1986.
When a company is faced with financial difficulties it may come to an arrangement with its creditors. The company may suffer from short-term cash flow problems and can agree with the creditors to allow postponement for some payments. In such circumstances the company’s business may be healthy but the company may not have the funds to pay all its debts to the creditors. It may be more beneficial to the creditors to come to an agreement to accept less payment, but the amount paid is more than what they would expect on liquidation. The company may be saved if such an arrangement can be agreed with the creditors (majority).
One of the ways in which a company in administration can achieve its rescue is by approving a CVA and being in administration, the moratorium will protect it from legal actions by its creditors. The Insolvency Act 2000 allows for smaller companies the benefit of a moratorium without having to enter into administration. However, bigger companies will have to enter into administration in order to enjoy the benefits of the moratorium, whilst the CVA proposal is being prepared. It is important to note that the effect of the moratorium in relation to a CVA is the same as in administration, but the directors remain in control of the company.
Directors may commence a CVA by proposing to the company and its creditors for a voluntary arrangement. Conversely, if the company is in administration or liquidation the directors cannot make a proposal, but the liquidators or administrators can make a proposal under a different procedure.
The aim of approving a CVA is usually to stop the creditors from winding up the company. This is achieved by offering the creditors a ‘better deal than liquidation’. Under section 1 of the Act, the CVA may be (1) ‘a composition of debts whereby the company agrees to pay only a certain proportion of the debt it owes, for example, 50p in the pound or (2) a scheme of arrangement whereby the company agrees to pay its debts in full but cannot pay them immediately. Usually a scheme is drawn up with a schedule as to when the creditors will be paid and the amounts of each payment.’
In addition to operating as a collective distribution regime, CVAs can also serve as a reorganisation tool. There has been an increasing number of troubled foreign companies relocating to the UK, aiming to use a CVA to achieve restructuring.
‘While CVAs have had a comparatively late start as a restructuring tool, all signs are that CVAs are gaining a renaissance and will become increasingly popular in multi-jurisdictional workouts.’
CVA procedures have been improved by the moratorium introduced by the Insolvency Act 2000. The Act offers a fair mechanism for rescue but there remain the concerns relating to the co-ordination between the directors and the IP (insolvency practitioners) supervisors involved in CVAs. It is beyond the scope of this text to enter into further detail regarding CVAs, but from what we have seen a CVA does have a chance of succeeding. It can be argued that a CVA may help a troubled company avoid liquidation by offering a better deal to its creditors. As a liquidator may propose a CVA, this means that depending on the circumstances, a CVA may be more advantageous than liquidation; the liquidator may believe that it would be more beneficial for the business of the company to be carried on but he lacks the necessary powers.
To continue, a company can enter into a scheme of arrangement under Part 26 of the Companies Act 2006. This is a more complex alternative to CVA and takes longer to set up. It enables a company (insolvent or not) to come into a compromise or an arrangement with a class of its creditors or members and can be used to restructure the capital when it is faced with financial problems. Recently, it has attracted much interest as it has provided an appropriate vehicle for the rehabilitation of troubled insurance companies (that were denied access to administration).
The scheme may be coupled with administration, as there is no provision for a moratorium to protect the company from creditor actions. In practice, a scheme is used within liquidation and asking the court to stop all proceedings whilst the liquidator reaches a compromise with the creditors.
The Insolvency Service Review Group referred to the scheme as complex and difficult to organize (lack of moratorium), costly and mainly beneficial to larger companies. In spite of the disadvantages of being costly and more time consuming than a CVA, Part 26 schemes are still used and at times preferred where the company is complex, with many different classes of creditors or members. Hence, schemes of arrangement may be used depending on the circumstances to reconstruct insolvent companies and in order to avoid liquidation.
RESCUE OUTSIDE THE INSOLVENCY LEGISLATION (INFORMAL ARRANGEMENTS)
We are now going to consider informal arrangements. ‘For the most part, informal arrangements involve privately negotiated agreements which are subject to the general law of contract.’ They usually involve a moratorium on existing debts. Informal arrangements usually cost less than formal arrangements and take less time to be set up and operate. There is more flexibility as the terms of the agreement can be changed during negotiations and as it is not publicized it maintains the company’s goodwill.
However, these arrangements are more likely to succeed in a company that has a small number of creditors, as negotiations will be easier and there is a lesser chance of having dissenting creditors (there must be an agreement to the arrangement by all creditors).
The creditors will need to be persuaded that they are aiding a company that is likely to produce returns. Furthermore, any secured creditors will usually have to agree not to enforce their security.
Such informal arrangements usually involve as stated above, a moratorium on repayment or could involve a plan to pay the debts in installments. It may well seem than an informal arrangement is an easier path to avoiding liquidation for companies with a small numbers of creditors; it is relatively cheap and flexible and if an agreement can be reached the company may be rehabilitated without the need of entering into any of the costly insolvency procedures.
To continue, if several banks have financed a company and one of the banks calls in its loan, this can affect the company, its employees and its creditors negatively. The Bank of England and other major banks set up a number of guidelines to assist with the informal rescue of companies in such cases. This is known as ‘The London Approach’.
The main idea behind this approach is that no bank will try to benefit more from the situation than any other. The lenders implement a ‘standstill’ to the debt they are owed and provide a short-term finance while a plan is considered by the company. One of the banks is appointed as a ‘lead banker’ and its role is to supervise the situation and produce a report and organize rescue plans with the assistance of a committee. A debt rescheduling agreement will then be made.
As part of the plan, the lenders may sometimes enter into a ‘debt-equity’ swap where they exchange a part of the unpaid debt for shares. These shares are usually ‘special preference’ giving priority to the lenders as to repayment and dividends. The banks may also reach to a compromise of the debt or often something more complicated.
The adoption of the ‘London Approach’ prevents huge losses to a bank and in many cases it led to businesses being rehabilitated. This approach seems to be very successful from the fact that only a relatively small number of companies enter into formal insolvency procedures. ‘The London Approach commands widespread acceptance in the banking community because it is seen to be fair and flexible.’
Professor A.Keay and Dr P. Walton provide a list of the advantages of some form of arrangement for the creditors such as: Prospect of better returns than from liquidation, through the continuance of the business as a going concern and the flexibility of schemes that can promote a variety of other arrangements
Moreover, in comparing the formal and informal arrangements, statutory workout procedures do not require unanimity (agreement of all creditors), which is the main weakness of informal arrangements. Company rescue philosophy and attitude is substantially different than formal liquidation procedures. Rescue practitioners should exercise their judgement accordingly and take on a different bearing from the IP in liquidation who is satisfied by merely collecting assets for distribution.
CONCLUSION
It may well seem that liquidation is a last resort option. From what we have seen in this text it appears that the insolvency rescue procedures and arrangements will often be more beneficial to the creditors than liquidation. The main reason for this is because they permit the business of the company to carry on and this may lead to its rehabilitation. Furthermore, the possibility of the sale of the company as a going concern will probably generate more proceeds than if the assets were sold under liquidation. Insolvency law experts state that insolvency rescue procedures may be more beneficial than liquidation as ‘liquidation and bankruptcy often produce poor returns to the creditors.’ Moreover, It is clear that liquidation is definitely not the first and only option for a troubled company to consider.
As regards which option to follow, it depends on each individual case and its circumstances, a matter for the company to decide accordingly.
In some cases, a company may be in such financial distress that rescue is not feasible therefore liquidation is unavoidable. However, if a troubled company sees a possibility of rescue, it may attempt it by any of the above ways. Although not as successful and efficient as Parliament intended them to be, these options do provide insolvent companies a chance of success as official data shows. Informal arrangements are increasingly used over recent years, especially the ‘London Approach’, providing companies with even more options outside the insolvency legislation.
It may well seem that advising a troubled company that the best thing to do is to enter into liquidation without even considering the various options available for rescue, is an absurd recommendation.
BIBLIOGRAPHY
TEXTBOOKS
Birds J, A J Boyle and others, ‘Boyle & Birds’ Company Law’ (6th edition Jordans 2007)
Campbell Dennis, ‘International Corporate Insolvency Law’ (Butterworths, 1992)
Dennis V. & Fox A. ‘The New Law of Insolvency: Insolvency Act 1986 To Enterprise Act 2002’ (The Law Society, 2003)
Dignam A. and Lowry J, ‘Company Law’ (5th edition Oxford University Press, 2008)
Finch Vanessa, ‘Corporate Insolvency Law, Perspectives and Principles’ (Cambridge University Press, 2003)
Goode R M, ‘The Principles of Corporate Insolvency Law’ (3rd edition Sweet & Maxwell, 2005)
Keay Andrew and Walton Peter, ‘Insolvency Law: Corporate and Personal’ (2nd edition Jordans, 2008)
Tolmie Fiona, ‘Corporate & Personal Insolvency Law’(2nd edition Cavendish Publishing Ltd, 2003)
ARTICLES
Armour John, ‘Reforming the Governance of Corporate Rescue: The Enterprise Act 2002’ ESRC Centre for Business Research, University of Cambridge Working Paper No. 289 (2004)
Baird K. & Ho L. C. ‘Company voluntary arrangement: the restructuring trends’ Insolv. Int. 2007, 20(8), 125
Company Lawyer, ‘Receivership Under Fire’ Comp. Law. 2001, 22(6), 161
Finch Vanessa, ‘The Recasting of Insolvency Law’ (The Modern Law Review 2005) Vol.68 No.5
Finch Vanessa, ‘Pre-packaged administrations: bargains in the shadow of insolvency or shadowy bargains?’ J.B.L. 2006, Sep, 568
Frieze S. ‘Is administration necessary?’ Insolv. Int. 1996, 9(6), 44
Keay Andrew, ‘What Future For Liquidation In Light Of The Enterprise Act Reforms’ J.B.L. 2005, Mar, 143-158
Kent P. ‘The London Approach’ J.I.B.L. 1993, 8(3), 83
Milman David, ‘Administration orders: the moratorium feature’ Insolv. Int. 1992, 5(9), 73-75
Milman David ‘Schemes of arrangement: their continuing role’ Insolv. L. 2001, 4(Sep), 145
Walton Peter, ‘Pre-appointment administration fees – papering over the cracks in pre-packs?’ Insolv. Int. 2008, 21(5), 72
ELECTRONIC ARTICLES
Graff Ryan, ‘Administrative Receiverships,’ (Amazines Free articles and Web content 2008) < https://www.amazines.com/Receivership_related.html> [accessed 28 November 2008]
REPORTS
Insolvency Service Review Group ‘Report on Company Rescue and Business Reconstruction Mechanisms’
SURVEYS
R3 Ninth Survey of Business Recovery in the UK (2001)
STUDIES
Katz A. & Muford ‘Study of Administration Cases’ (2006) <http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/research/corpdocs/studyofadmincases.pdf>
ELECTRONIC RESOURCES
http://www.westlaw.co.uk
http://www.companyrescue.co.uk
https://www.amazines.com
http://www.insolvency.gov.uk
OTHER RESOURCES
Keay Andrew, Seminar Material: Slides and handouts
V.Finch, Corporate Insolvency Law, Perspectives and Principles (Cambridge University Press, 2003) 10
J. Birds, A J Boyle and others, Boyle & Birds’ Company Law (6th edition Jordans 2007) 3
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 9
It recommended a fundamental reform of the law in ‘order to restore respect for the law of insolvency and to ensure that the solutions provided to situations of insolvency were as fair and equitable as could reasonably be achieved.’ F. Tolmie, Corporate & Personal Insolvency Law (2nd edition Cavendish Publishing Ltd, 2003) 12
Consolidated the Insolvency Act 1985 and sections of the Companies Act 1985
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 11
V.Finch, Corporate Insolvency Law, Perspectives and Principles (Cambridge University Press, 2003) 23
The R3 Ninth Survey of Business Recovery in the UK (2001) put the overall survival rate at 18 per cent. It was revealed that smaller companies had a 15 per cent survival rate while larger companies had a 32 per cent survival rate.
V.Finch, Corporate Insolvency Law, Perspectives and Principles (Cambridge University Press, 2003) 369
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 226
F. Tolmie, Corporate & Personal Insolvency Law (2nd edition Cavendish Publishing Ltd, 2003) 168
‘Finance and Refinancing’, (Company Rescue Website 2008) <http://www.companyrescue.co.uk/company-rescue/options/finance.aspx#guarantee> [accessed 29 November 2008]
Seminar 3 slides by A.Keay
‘Finance and Refinancing’, (Company Rescue Website 2008) <http://www.companyrescue.co.uk/company-rescue/options/finance.aspx#guarantee> [accessed 29 November 2008]
Assets include: stock, machinery and property
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 41
John Armour, ‘Reforming the Governance of Corporate Rescue: The Enterprise Act 2002’ ESRC Centre for Business Research, University of Cambridge Working Paper No. 289 (2004)
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 41
Dennis Campbell, International Corporate Insolvency Law (Butterworths, 1992) 141
Ryan Graff, ‘Administrative Receiverships,’ (Amazines Free articles and Web content 2008) < https://www.amazines.com/Receivership_related.html> [accessed 28 November 2008]
V.Finch, Corporate Insolvency Law, Perspectives and Principles (Cambridge University Press, 2003) 235
Ryan Graff, ‘Administrative Receiverships,’ (Amazines Free articles and Web content 2008) < https://www.amazines.com/Receivership_related.html [accessed 28 November 2008]
Dennis Campbell, International Corporate Insolvency Law (Butterworths, 1992) 142
F. Tolmie, Corporate & Personal Insolvency Law (2nd edition Cavendish Publishing Ltd, 2003) 48
‘Administrative Receivership a detailed guide’, (Company Rescue Website 2008) <http://www.companyrescue.co.uk/company-rescue/options/receivership.aspx> [accessed 29 November 2008]
Unless the company has borrowed money from a bank before 15th September 2003 and the debenture in question was executed before the commencement of the Act.
Vanessa Finch, ‘The Recasting of Insolvency Law’ (The Modern Law Review 2005) Vol.68 No.5
Company Lawyer, ‘Receivership Under Fire’ Comp. Law. 2001, 22(6), 161
John Armour, ‘Reforming the Governance of Corporate Rescue: The Enterprise Act 2002’ ESRC Centre for Business Research, University of Cambridge Working Paper No. 289 (2004)
Company Lawyer, ‘Receivership Under Fire’ Comp. Law. 2001, 22(6), 161
Vanessa Finch, ‘The Recasting of Insolvency Law’ (The Modern Law Review 2005) Vol.68 No.5
Andrew Keay, ‘What Future For Liquidation In Light Of The Enterprise Act Reforms’ J.B.L. 2005, Mar, 143-158
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 90
Must be qualified insolvency practitioners
Andrew Keay, ‘What Future For Liquidation In Light Of The Enterprise Act Reforms’ J.B.L. 2005, Mar, 143-158
If the debenture was executed on or after the commencement of the Act; 15 September 2003. A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 92
The objectives are laid out in a hierarchical order and the administrator can only select a single objective and follow the hierarchy. Therefore, only if the administrator believes that it is not reasonably practicable to select objective (a), will move on to objective (b), and if he thinks the same of objective (b), will move to the last in the priority, objective (c).
V. Dennis & A.Fox ‘The New Law of Insolvency: Insolvency Act 1986 To Enterprise Act 2002’ (The Law Society, 2003) 142
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 94
Administrators attempt the first objective in less than 10% of administrations and by far, most of the administrations are aimed at achieving the second objective, followed by a small number of administrators aiming at the third objective. A. Katz & M. Muford ‘Study of Administration Cases’ (2006) <http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/research/corpdocs/studyofadmincases.pdf> [accessed 4 December 2008]
David Milman, ‘Administration orders: the moratorium feature’ Insolv. Int. 1992, 5(9), 73-75
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 107
F. Tolmie, Corporate & Personal Insolvency Law (2nd edition Cavendish Publishing Ltd, 2003) 110
V. Dennis & A.Fox ‘The New Law of Insolvency: Insolvency Act 1986 To Enterprise Act 2002’ (The Law Society, 2003) 160
Administration may be disturbed if for example the creditors became aware of the intention to put the company into administration and may act swiftly to perform their judgments against the company’s assets. A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 107
David Milman, ‘Administration orders: the moratorium feature’ Insolv. Int. 1992, 5(9), 73-75
Peter Walton, ‘Pre-appointment administration fees – papering over the cracks in pre-packs?’ Insolv. Int. 2008, 21(5), 72
Vanessa Finch, ‘Pre-packaged administrations: bargains in the shadow of insolvency or shadowy bargains?’ J.B.L. 2006, Sep, 568
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 125
Peter Walton, ‘Pre-appointment administration fees – papering over the cracks in pre-packs?’ Insolv. Int. 2008, 21(5), 75
R M Goode, The Principles of Corporate Insolvency Law (3rd edition Sweet & Maxwell , 2005) 338
A. Katz & M. Muford ‘Study of Administration Cases’ (2006) <http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/research/corpdocs/studyofadmincases.pdf> [accessed 4 December 2008]
F. Tolmie, Corporate & Personal Insolvency Law (2nd edition Cavendish Publishing Ltd, 2003) 85
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 141
S. Frieze ‘Is administration necessary?’ Insolv. Int. 1996, 9(6), 44
Companies must satisfy two or more of the following criteria: 1) Turnover no more than £2.8m 2) Assets on the balance sheet must not exceed £1.4m 3) The company must not have more than 50 employees
F. Tolmie, Corporate & Personal Insolvency Law (2nd edition Cavendish Publishing Ltd, 2003) 91
A. Dignam and J.Lowry, ‘Company Law’ (5th edition Oxford University Press, 2008) 399
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 144
K. Baird & L.C. Ho ‘Company voluntary arrangement: the restructuring trends’ Insolv. Int. 2007, 20(8), 125
A current successful attempt is the case of Deutsche Nickel, a troubled German company, which became an English company so as to enter administration and promote a CVA. ibid
V.Finch, Corporate Insolvency Law, Perspectives and Principles (Cambridge University Press, 2003) 355
Sch.4, para. 5 of the Insolvency Act 1986 states that a liquidator may carry on the business of the company only so far as may be necessary for its beneficial winding-up.
R M Goode, The Principles of Corporate Insolvency Law (3rd edition Sweet & Maxwell, 2005) 390
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 196
F. Tolmie, Corporate & Personal Insolvency Law (2nd edition Cavendish Publishing Ltd, 2003) 82
D. Milman ‘Schemes of arrangement: their continuing role’ Insolv. L. 2001, 4(Sep), 145
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 196
‘Report on Company Rescue and Business Reconstruction Mechanisms’ para.43
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 197
Seminar 3 Slides by A. Keay
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 193
Seminar 3 Slides by A. Keay
An agreement must be reached with all the creditors as stated above
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 195
F. Tolmie, Corporate & Personal Insolvency Law (2nd edition Cavendish Publishing Ltd, 2003) 77
An inter-creditor debt rescheduling agreement
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 195
Although there is no official data
P. Kent ‘The London Approach’ J.I.B.L. 1993, 8(3), 83
R M Goode, The Principles of Corporate Insolvency Law (3rd edition Sweet & Maxwell, 2005) 233
A.Keay and P.Walton, Insolvency Law: Corporate and Personal (2nd edition Jordans, 2008) 191
The R3 Ninth Survey of Business Recovery in the UK (2001) put the overall survival rate at 18 per cent. It was revealed that smaller companies had a 15 per cent survival rate while larger companies had a 32 per cent survival rate.
