There are certain requirements that a firm must have in its possession before it qualifies to proceed with company administration. A cash flow system should be in place to provide the necessary guidelines required. The firm should come up with realistic profit estimates. Various factors should be put into consideration when coming up with forecasts. It is important to provide a true picture of the company’s financial position.
The procedure of company administration requires the aid of an insolvency practitioner who takes the role of the court appointed administrator. The insolvency practitioner will take charge of the entire company operations. In the situation that the company has got limited assets, zero profits and a weak cash flow, the experts can recommend for a voluntary liquidation of the firm.
The entire process of company administration can take twelve months. In some cases, the court can increase the duration of time to complete the process. The role of the administrator is to revive the business back to substantial profits. The main challenge faced by the administrators is limited time. The court demands to receive a detailed proposal of the company administration process within six weeks. The proposal should encompass the strategy that the administrator will use to complete the company administration process.
The creditors will be expected to meet two weeks after the initiation of the process. The meeting can be held through correspondence. The main goals that the administrator presents can be voted upon. If the majority, disagree with the proposal, the administrator must inform the court about this. After the initial meeting, any other preceding meetings will require the administrator to report the details to the court and the company registrar’s office. The final process is time consuming and will determine the administrator’s level of success. Consistent reporting to the courts is required during the entire process.