What does going into administration mean for a business?

Administration is a formal insolvency procedure under UK law that provides a company with immediate protection from creditor enforcement while an insolvency practitioner (IP) takes control of its operations. Once appointed, the administrator replaces the directors in managing the company’s affairs, business, and property. The key purpose of administration is to rescue the company as a going concern, preserve jobs, and maximise returns to creditors. During administration, a statutory moratorium is imposed, which prevents creditors from taking legal action without the administrator’s consent or court permission. This breathing space allows the administrator to assess options such as restructuring, arranging a Company Voluntary Arrangement (CVA), or selling the business. For directors, administration is often a last resort when creditor pressure has escalated, but it can be an effective way to stabilise the company and avoid liquidation. While directors lose day-to-day control, administration offers a structured path to recovery that balances creditor rights with the survival of the business.