Execution formalities—administrators
Execution formalities—administrators

The following Commercial guidance note provides comprehensive and up to date legal information covering:

  • Execution formalities—administrators
  • Capacity
  • Simple contracts
  • Execution by the company
  • Execution by seal
  • Execution by the company via its administrator
  • Execution on behalf of the company
  • Deeds
  • Who can act as a witness
  • HM Land Registry requirements

This Practice Note provides practical guidance on the proper execution of simple contracts and deeds for administrators.

Capacity

A company will ordinarily go into administration if it cannot pay its debts and the directors believe that a creditor may take action that would adversely affect the business of the company. As such, it is a mechanism by which the company can protect itself from its creditors but still continue to trade even though it is technically insolvent.

Administration is only possible where:

  1. the company is unable or is likely to become unable to pay its debts, in which case the directors or creditors may appoint an administrator, or

  2. there has been a default of a payment under a floating charge and the holder of the charge appoints the administrator

Administrators can be appointed in or out of court. For more information on administration generally see Practice Note: Administration—an introductory guide.

The most important thing to note as far as the execution of documents is concerned is that once an administrator has been appointed to a company, the directors of that company cease to have any capacity to enter into contracts or execute deeds.

The effect of the appointment of an administrator is to take the management of the affairs, business and property of the company away from the directors and vest it with the