Overview
Administration is a corporate rescue mechanism introduced by the Companies and Allied Matters Act 2020. In administration, an independent insolvency practitioner, known as an administrator, takes control of a financially distressed company's affairs and works to rescue the company, preserve its business, or achieve a better outcome for creditors than an immediate winding-up would likely achieve.
The Federal High Court recently considered the collective nature of administration in Ahmed Investments Limited v. Sultan Rice Integrated Limited (In Administration), holding that administration is not an adversarial litigation process for determining individual creditors' claims, but a collective process designed to protect the interests of creditors as a whole.
This insight examines the key considerations for creditors dealing with a company in administration, including the administrator's role and objectives, the automatic moratorium, the collective nature of administration proceedings, practical steps for creditors, and statutory remedies against the administrator.
