Light touch administration

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Light touch administration
  • Position of directors
  • Position of administrators
  • Protocol agreement

Light touch administration

‘Light touch’ administration is not a new concept, but it is back in the news with the light touch approach used in the administrations of high street restaurant chain, Carluccio’s and retailer, Debenhams.

A light touch administration essentially refers to the widening of the authority granted by the administrators to the directors to continue to run the company during the administration, while the administrators only take a ‘light touch’ approach. Directors will continue to take on some management duties and in this way, the directors may implement the administrator’s decisions but also make some management decisions themselves, within restricted parameters.

A light touch administration is usually suited to a situation where the administrators consider the company can be rescued as a going concern (under paragraph 3(1)(a) of Schedule B1 to the Insolvency Act 1986 (IA 1986)). The company can benefit from the administration moratorium to protect the business from creditor enforcement, while working with an administrator to maintain or mothball operations and then exit administration when that purpose has been achieved. The moratorium can last for an initial period of up to 12 months to see a business through difficult times.

For the administrators, the control of the parallel management powers exercised by both administrators and directors is not straightforward. It needs careful consideration and will vary depending on the type of business and individual

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