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In Administration' and 'administration orders


The current law concerning administration was introduced with effect from 1 October 2005 as per Statutory Instrument 2005 No.1989, the Limited Liability Partnerships (amendment) regulations 2005. Under this regime, a limited liability partnership will usually be described as being 'in administration' – under the old regime a limited liability partnership would be described as subject to an 'administration order'.

What follows is a brief outline of the process of administration: it is not a complete statement of the law.

1. What is 'in administration'?

Administration is when a person, 'the administrator', is appointed to manage a limited liability partnership's affairs, business and property for the benefit of the creditors. The person appointed must be an insolvency practitioner and has the status of an officer of the court (whether or not he or she is appointed by the court).

The objective of administration is to:

rescue a limited liability partnership as a going concern;
achieve a better price for the limited liability partnership's assets or otherwise realise their value more favourably for the creditors as a whole than would be likely if the limited liability partnership were wound up (without first being in administration); or
in certain circumstances, realise the value of property in order to make a distribution to one or more preferential creditors.


2. How does the limited liability partnership enter administration?

A limited liability partnership enters administration when the appointment of an administrator takes effect. An administrator may be appointed by:

an administration order made by the court;
the holder of a floating charge; or
its members.
The administrator must perform his or her functions as quickly and efficiently as reasonably practicable.

3. What are the effects on a limited liability partnership of being in administration?

When a limited liability partnership enters administration:

any pending winding-up petitions will be dismissed or suspended;
there will be a moratorium on insolvency and on other legal proceedings;
if an administrative receiver has been appointed, he or she must vacate office;
if a receiver of part of the company's property has been appointed, he or she must vacate office(if the administrator requires this).


4. Who must be told that a limited liability partnership is in administration?

As soon as reasonably practicable, an administrator must send a notice of his or her appointment to the limited liability partnership and each of its creditors and publish notice of his or her appointment in the Gazette and in a newspaper in the area where the company has its principal place of business.

What is the Gazette?
The Gazette is the official newspaper of record which contains various statutory notices and advertisements. References to the Gazette are to the Edinburgh Gazette in respect of companies registered in Scotland. It is published twice weekly and can be obtained from The Edinburgh Gazette, 26 Rutland Square, Edinburgh EH1 2BW. Visit www.gazettes-online.co.uk for more information.

The administrator must send a notice of his or her appointment to the Registrar on Form 2.11B (Scot).

While a limited liability partnership is in administration, every business document issued by or on behalf of the limited liability partnership or the administrator must state the name of the administrator and that he or she is managing the affairs, business and property of the limited liability partnership.

5. What does the process of administration involve?

The administrator will request a statement of the limited liability partnership's affairs from relevant people (e.g. an officer or employee of the limited liability partnership).

No later than 8 weeks after the limited liability partnership enters administration, the administrator must make a statement setting out proposals for achieving the purpose of the administration or explaining why they cannot be achieved. The proposals may include a voluntary arrangement or a compromise or arrangement with creditors or members.

The statement setting out the proposals must be sent to:

Companies House.
Every creditor of the limited liability partnership with an invitation to an initial creditors' meeting, if one is to be held. The business of the initial creditors meeting will be to approve (with or without modifications) the statement of proposals. Following the initial meeting, the administrator may hold further creditors' meetings, form a creditors committee, or deal with matters in correspondence between the administrator and creditors.
Every member of the limited liability partnership, unless the administrator undertakes to provide a copy free of charge to any member of the limited liability partnership who applies in writing for a copy. Any revisions to the proposals following a creditors' meeting must, likewise, be notified to members.
Decisions taken at creditors' meetings must be reported to the Register of Companies on Form 2.23B(Scot), 'End of Administration' form.

6. When does administration end?

There are several ways in which administration can come to an end.

Administration can end automatically when the administrator's term of office expires and must be notified to the Registrar on Form 2.21B (Scot). The appointment of an administrator expires after 1 year. However, this may be extended with the consent of creditors or the court. Any extension must be notified to the Registrar on Form 2.22B(Scot).

An administrator appointed under a court order may apply to the court to end administration if he or she thinks that the purpose of the administration cannot be achieved or the limited liability partnership should not have entered administration, or a creditors' meeting requires the application. The court will discharge the administration order and the administrator must notify the Registrar on Form 2.24B(Scot) .

An administrator appointed by the holders of a floating charge or by the limited liability partnership or its members may end administration when the purpose of administration has been sufficiently achieved. The administrator must file notice with the court and with the Registrar on Form 2.23B (Scot).

Administration may end on the application of a creditor to the court alleging an improper motive on the part of the person who appointed the administrator or applied to the court for an administration order. The administrator must send a copy of the order with Form 2.33B to the Registrar within 14 days of the order being made.

Administration may end when the limited liability partnership moves into creditors' voluntary winding up. This can happen where the administrator thinks that each secured creditor is likely to be paid and a distribution will be made to unsecured creditors, if there are any. The administrator must notify the Registrar on Form 2.25B (Scot) and send copies to the court and each creditor. The limited liability partnership will then be wound up as if a resolution for voluntary winding up had been passed on the day on which notice is registered with the Registrar.

Administration may end when the limited liability partnership moves into dissolution. This can happen if the administrator thinks that a limited liability partnership has no property with which to make a distribution to its creditors.
The administrator must send notice to Companies House on Form 2.26B(Scot) and send copies to the court and each creditor.
3 months after the date the form is registered with Companies House, the limited liability partnership will be dissolved unless, on application to the court, an order is made to extend or suspend the period or stop the dissolution. Notice of the order must be notified to Companies House on Form 2.27B(Scot)

7. Which forms should be used?

As per Statutory Instrument 2005 No 1989, the Limited Liability Partnership's (Amendment) Regulations 2005 introduced new statutory forms for filing with Companies House, some of which are listed below:

Form title Number
Notice of administrator's appointment 2.11B (Scot)
Notice of statement of affairs 2.15B (Scot)
Statement of administrator's proposals 2.16B (Scot)
Statement of administrators revised proposals 2.17B (Scot)
Notice of result of meeting of creditors 2.18B (Scot)
Notice of order to deal with secured property 2.19B (Scot)
Administrators progress report 2.20B (Scot)
Notice of automatic end of administration 2.21B (Scot)
Notice of extension of period of administration 2.22B (Scot)
Notice of end of administration 2.23B (Scot)
Notice of court order ending administration 2.24B (Scot)
Notice of move from administration to creditors' voluntary liquidation 2.25B (Scot)
Notice of move from administration to dissolution 2.26B (Scot)
Notice to registrar of companies in respect of date of dissolution 2.27B (Scot)
Notice of resignation by administrator 2.29B (Scot)
Notice of Vacation of office by administrator 2.30B (Scot)
Notice of appointment of replacement/additional administrator 2.31B (Scot)
Notice of insufficient property for distribution to unsecured creditors other than by virtue of s.176A(2)(a) 2.32B (Scot)
Please note: These forms are not available from Companies House. They can be obtained from company law stationers or by visiting the Insolvency Service website