County Court Administration Orders

Administration orders became a prominent part of the UK legal system with the passage first of the Insolvency Act 1986 and its further amendments in the Enterprise Acts 2002.

It is common for the legal advice of solicitors to advocate that insolvent individuals file a County Court administration order.

Administration is essentially a lifeline for companies and individuals that have become insolvent, meaning they can no longer meet their liabilities.

The process of Administration, and the accompanying administration orders, allow a company to continue limping on in its business, and are considered the legal alternative to liquidation.

Many solicitors, when sought out to provide legal advice, will order administration high above liquidation in their priorities because at least if a company is still trading, or an individual still earning money, they have the chance of getting better.

In this article we will be focusing on the effects having a County Court administration order served on an individual, although the process for companies is much the same (although it may not take place in the County Court).

Administration orders are a procedure that can be carried out in the County Courts and can keep a failing individual away from their creditors, who will be looking to have their debts repaid. Administration orders attempt to prevent a person from getting caught up in a debt spiral, a vicious whirlwind where the individual (in a Sisyphus like irony) constantly has to take in more debt to pay their old debt.

It is sound legal advice for a solicitor to tell an insolvent individual to seek an administration order in the County Courts. The procedure is cheaper then outright bankruptcy and does not cripple the insolvent individual (the debtor) and brand them for a number of years following.

Applying for a County Court administration order

The debtor will most likely be the subject of a County Court claim and will be unable to pay the amount contained in the judgement. As long as the debt does not exceed the County Court limit of £5,000 the debtor may make a formal request for a County Court administration order.

County Court administration orders work by bringing together all the debts of the debtor, with a particular focus on mortgages, secured debts, credit card debts, community charges and outstanding maintenance payments.

A solicitor could be consulted for legal advice on which debts and assets must be declared in the administration order, although this could obviously add to the debt burden.

The County Court must formally inform all listed creditors of the debtor when an administration order is filed. This is the time for the creditors to voice any dispute over the amounts it is claimed are owed. If an individual has the misfortune of lending the debtor money while the administration order is being worked through, their solicitor can apply for them to be placed in the original order.

What a County Court administration order contains

The administration order will itself contain the County Court ruling on whether the debt is to be paid in instalments and by what method. The court may also file an Attachment of Earnings order so that the payments can be legally removed from the wages of the debtor.

Failure to pay

If declaring themselves to be insolvent and initiating an administration order against themselves is not a sobering enough process to inspire the debtor to be more responsible, further action can be taken by the County Court.

The debtor will not be able to be the director of another company, will not be able to acquire any credit in excess of over £500 on their own and will not be able to enter into any business transaction without declaring the administration order to the other party.

Failure to comply with these County Court administration order punishments can result in heavy fines or imprisonment.

It is wise to seek the legal advice of a professional solicitor if an individual is worried about their financial options or what may happen to their assets if they file an administration order in the County Court.