COMPANY ADMINISTRATION AND LIQUIDATION
Company Administration:
Administration was introduced into company law by the Enterprise Act 2002, which amended the Insolvency Act 1986 so as to introduce provisions designed to allow a company to regain profitability and continue as a going concern after experiencing financial difficulties.
An administrator’s function is to “do anything necessary or expedient for the management of the affairs, business and property of the company” (paragraph 59(1) of Schedule B1 to the Insolvency Act 1986. There are three purposes of administration (Schedule B1 of the Insolvency Act 1986, para. 3(1)):
- Rescuing the company as a going concern; or
- 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
- Realising property in order to make a distribution to one or more secured or preferential creditors.
The powers of an administrator are set out in Schedule 1 of the Insolvency Act 1986. The powers are very broad and include power to use the company’s seal (paragraph 8), power to appoint any agent to do any business which he is unable to do himself or which can more conveniently be done by an agent (paragraph 11).
Company Liquidation:
When a company is put into liquidation either voluntarily or by the court, the powers of its directors cease and the company is managed by a liquidator. If more than one liquidator is appointed, the joint liquidators may be authorised to act jointly or jointly and severally.
The general rule is that the powers and authorities of the directors of a company cease when it enters liquidation, unless the liquidator (or if there is none, creditors) sanction their continuance. There is no provision for the powers of a company’s directors to continue if it is being wound up by the court.
The powers of a liquidator are statutory and are not set out in the company’s articles of association. They are listed in Schedule 4 of the Insolvency Act 1986 and include:
- Power to bring or defend any action or other legal proceedings in the name and on behalf of the company.
- Power to carry on the business of the company so far as may be necessary for its beneficial winding up.
- Power to sell any of the company’s property by public auction or private contract with power to transfer the whole of it to any person or to sell the same in parcels.
- Power to do all acts and execute, in the name and on behalf of the company, all deeds, receipts and other documents and for that purpose to use, when necessary, the company’s seal.
How we can help
If you’ve been asked to obtain the assistance of a notary public with regards to a company's administration or liquidation, our expert Notary Public, John Olatunji can help you by notarising documents to facilitate this process.
Your notary appointment can be arranged to be at one of our offices in Surrey, Richmond upon Thames, Kent or Essex. Alternatively, you can use our mobile notary service to arrange an appointment at a suitable time and place, such as your home or office.
Get in touch with John today to discuss your needs and see how he can help you.