Administration (law)
As a legal concept, administration is a procedure under the insolvency laws of a number of common law jurisdictions, similar to bankruptcy in the United States. It functions as a rescue mechanism for insolvent entities and allows them to carry on running their business. The process – in the United Kingdom colloquially called being "under administration" – is an alternative to liquidation or may be a precursor to it. Administration is commenced by an administration order.
A company in administrative receivership is operated by an administrator (as interim chief executive with custodial responsibility for the company's assets and obligations) on behalf of its creditors. The administrator may recapitalize the business, sell the business to new owners, or demerge it into elements that can be sold and close the remainder.
Most countries distinguish between voluntary (board-decided) and involuntary (court-decided) receivership. In voluntary administrative receivership, the administrator is appointed by the company directors. In involuntary administrative receivership, the administrator is appointed by a judicial court. The legal terms for these processes vary from country to country, and the processes may overlap.
Republic of Ireland[edit]
The Republic of Ireland operates a similar process called examinership, but companies require permission from the High Court to enter and leave examinership.
New Zealand[edit]
In New Zealand, voluntary administration is covered by the Companies Act 1993,[13][14] as amended under the Companies (Voluntary Administration) Regulations Bill in 2007.[15]
Ukraine[edit]
In Ukraine, a system of "sanation" (Ukrainian: санація) measures take place to prevent or lessen the effect of insolvency.[16] The basic components of those measures include providing special loans and subsidies; exemptions for issuing a credit or taxation; restructuring of the business's debts and capital; change of organizational and production structure of the debtor; full or partial nationalization; others.
Following the dissolution of the Soviet Union and reforming the existing socialist law, in 1999 there was established a law "About restoring the debtor's solvency or declaring him bankrupt".
The official who administers "sanation" is known as an "arbitral director" (Ukrainian: aрбітрaжний керуючий) and is appointed by a court.[17]