How does administration protect a company from creditors?

Administration provides an immediate moratorium on legal actions by creditors. This means that once an administrator is appointed, creditors cannot issue or continue winding-up petitions, repossess assets, or take enforcement action such as bailiff visits without court approval. The moratorium creates a vital breathing space for the administrator to evaluate the company’s options without constant creditor pressure. This protection is particularly important for businesses under threat from multiple creditors or from aggressive HMRC enforcement. During this period, the administrator works to preserve company assets, restructure debts, and explore possible sales or refinancing. For directors, the moratorium gives reassurance that the company will not collapse overnight due to creditor actions, while for employees it provides a chance to keep their jobs. However, the moratorium is temporary, lasting only while the company is in administration, so a long-term solution such as a CVA or business sale must be reached to ensure survival.