Q&As

What happens if a corporate director goes into administration? Does the company remain a corporate director and do the administrators assume the power to make decisions on behalf of the company in relation to the directorship?

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Published on LexisPSL on 10/06/2020

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • What happens if a corporate director goes into administration? Does the company remain a corporate director and do the administrators assume the power to make decisions on behalf of the company in relation to the directorship?
  • Nature of administration
  • Consequences of administration on corporate directorship

Nature of administration

Directors of companies which become, or are likely to become, insolvent face additional considerations and are under a duty to minimise losses to the company’s creditors. Once an administrator is appointed, the administrator assumes wide ranging powers in relation to the company and the directors may only continue to exercise powers with the administrators' consent. The powers of an administrator are set out in Schedule B1 to the Insolvency Act 1986 (IA 1986) and IA 1986, Sch 1. See Administration—overview.

The administrator's powers are the same no matter if they are appointed by the court or out-of-court. They are very wide as an administrator may do anything necessary or expedient for the management of the affairs, business and property of the company.

The broad nature of an administrator’s powers was demonstrated in Re Inspired Asset Management Ltd (in administration), where the c

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