Q. A company I am suing has gone into administration. What effect will this have on my claim?
A. An administrator is appointed with the aim of either rescuing a company which is in financial difficulty or, where that is not possible, of maximizing the monies available to the company's creditors. Where an administrator is appointed, all legal proceedings are frozen or "stayed" and you would require the consent of the court (or the administrator) to continue your action. In practice, it is unlikely that you would get this consent as it is considered unfair on the other creditors.
The administrator has a duty to act fairly and in the interests of the creditors as a whole. Within two months of his appointment, an administrator will report to the creditors and thereafter will provide regular progress reports. If, however, you want to be more involved in the process you may wish to consider forming a creditors committee.
We recommend that you contact the administrator and provide him with details of your claim ASAP. Assuming your claim accepted, you will be entitled to a share equally (pro rata to the amount due to each creditor) with other creditors in the funds available to the company's creditors at the end of the administration. Unfortunately, the reality often is that the amount received is only a small percentage of what was actually owed.
