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By Jamie1973
My brother and I run a SME and for the past year we have been struggling to make ends meet. I have been reading about administration. Is this something that we should consider. We would like to try and save the business if possible.
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By Luke
Hello Jamie1973 and welcome

As far as I am aware, the issue with Administration is that you as directors will lose control of the company. The Administrator takes control and then runs the company for the benefit of the creditors, not you. This could result in them deciding to close the company anyway.

If you want to remain in control and save the business, I would suggest that either a company voluntary arrangement or pre-pack liquidation might be better options to consider.
Hello Jamie1973

If you run a SME you would not normally consider Administration as the first option to try and turn it around. The primary affect of Administration is that the Directors lose the power to run the business. This is handed to an Administrator who will then run the business in a way which is most appropriate to protect the position of the creditors. As Luke has said, this could result in the company being liquidated.

Have a look at the links regarding CVA and pre-pack liquidation that Luke posted. You should then speak to a company insolvency expert who will be able to guide you to find the best solution.
Hello Jamie1973

The situation that James and Luke are describing is a trading administration where the business is traded on with a view to find a purchaser.

Nowadays many purchasers, often former management, are identified before the administration procedure begins and the sale to the new owner takes place straight away (a pre-pack).

Often a near-identical result can usually be obtained through a similarly structured liquidation which may cost substantially less.
Hello Jamie1973

I agree with the other posters, given you run a smaller business the best solution for you and your company is probably not trading administration. You will remain in better control of the process and the eventual restructuring of the business by considering either a Company Voluntary Arrangement or Pre-Pack Liquidation as Mark has highlighted. I do advise you to speak to a company debt expert such as the ones who post on this forum who will be able to talk you through your options and help decide the best solution for you.