Administrations are intended to be one of the Insolvency Act's business rescue procedures, but given the impact they have on Administration creditors they are often perceived as simply another insolvency process; whilst the increasing use of prepack administration has also given rise to controversy. This article outlines what an Administration is and how they, and in particular prepacks, work.

What is Administration?

While it is quite a small world, the UK's business rescue and turnaround management industry uses a wide variety of acronyms and abreviations. So this article provides a guide to who's who and what's what in the world of business rescue and turnaround management consulting:

In early 2010 HMRC (Her Majesty's Revenue & Customs) served notice for a winding up petition against a small trading company. The company had ignored HMRC for three years and had not submitted accounts for three years, not since 2007. A director attended the winding up hearing in court unrepresented. He said he was trying to reach agreement with the Revenue and was granted 3 weeks stay of execution.

The number of small business entrepreneurs in the UK has leapt by 117 per cent in the last five years, according to Experian. The massive growth in one or two man band businesses has fuelled a 41 per cent increase in the total number of companies in the UK.

Experian’s business data also shows that these small businesses over the last five years have also managed to maintain the lowest insolvency rate and second healthiest financial strength score compared to other types of businesses.