A notice of intention to appoint administrators is a document filed in court that notifies relevant parties of a company’s intention to enter into administration. The aim of filing this document is typically to prevent the company in question from going into liquidation, whether that ends up being through a pre-pack sale or the creation of a suitable business rescue plan during a period of reprieve from creditor legal action. The notice of intention to appoint administrators serves as a preliminary step, providing the company with a window in which it can assess which of these options may be most suitable.
Who Can File A Notice Of Administration?
The authority to place a company into administration and file a notice of intention to appoint administrators typically lies with company directors or shareholders. Creditors holding a floating charge may also issue a notice of intention if they believe formal intervention is required to rectify the company’s financial situation. Floating charge holders can also object to a notice that may be issued if they do not approve of the administrator chosen.
What Happens When A Notice Of Intention Is Filed?
A notice of intention to appoint administrators serves multiple purposes and triggers a number of different events, all aimed at providing a struggling company with the opportunity to avoid liquidation.
As soon as the notice has been filed at court, the company will enter into a moratorium period for 10 business days. This grants the company temporary breathing room from creditor actions during which it can assess its financial situation and explore viable rescue options such as restructuring or the sale of the business and/or assets. At the end of this 10-day period, the company must either demonstrate evidence of a suitable rescue plan being in place or, if necessary, apply for an extension to the moratorium. The courts will only grant an extension if they believe that the company will make progress in this time.
When a notice of intention is filed, the company must also communicate its intentions transparently to its creditors and other stakeholders. This transparency fosters an environment that promotes open communication, increasing the likelihood that a suitable course of action for both the company and its creditors is agreed upon.
What Is The Process Of Issuing A Notice Of Intention?
If company directors wish to issue a notice of intention, they must first inform floating charge holders of their intention to do so with at least five days’ notice. Providing floating charge holders do not object, the company can then appoint a licensed insolvency practitioner to act as the administrator and assist the company with overseeing the rescue process. The notice is then filed to the court, at which point the 10-day moratorium is simultaneously triggered. The appointed insolvency practitioner will then work with the business to explore the different options available and decide whether to continue with the company administration process or pursue an alternative company rescue method.
If you wish to issue a notice of intention to appoint administrators, it is therefore crucial to get expert advice first. The business rescue experts and licensed insolvency practitioners here at Ballard Business Recovery can help. Our team will explain exactly what your business needs to do depending on your circumstances and can work with you throughout the administration process. Get in touch with us today to find out more.
