This is the formal procedure of appointment of an administrator for a company that is insolvent with the goal of bringing about a recovery. An administrator is appointed by an administration deed by the company in a general meeting.
Requirements of an administration deed.
An administration deed shall specify: – The proposed administrator of the deed; The property of the company available to pay the creditors’ claims; The nature and duration of any moratorium period or which the deed provides; The extent to which the company is to be released from its debts; The conditions, if any required for the deed to come into operation and continue in operation; The circumstances under which the deed terminates; The order in which proceeds of realizing the property referred to in paragraph (b) are to be distributed amongst the creditors bound by the deed; The date which shall not be later than the day the administration begins, on or before which claims that are admissible under the deed, shall have arisen.
Notice of administration
Immediately after the commencement of administration the administrator shall- a. Send to each creditor of the company a written notice of execution of the deed; b. Give public notice of the execution; and c. Deliver written notice of the execution to the Official Receiver, court and the registrar.
Function of an administrator
The administrator shall supervise the implementation of the administration deed.
Effect of administration
An administration deed shall bind a. The company b. The company’s directors and secretary c. The company’s shareholders; d.The administrator and All the company’s creditors in relation to claims arising on or before the day specified in the deed.
Termination of administration
An administration shall be terminated where a.The court makes an order b.Circumstances occur, which are specified in the deed for terminating it.