In this short article, we will discuss the appointment of an administrator under the Corporate Insolvency and Restructuring ("Act 2020")
First of all, being in an insolvent state simply means being unable to pay debts off and Act 2020 is the legal regime for corporate bodies and their administration in the event that they become insolvent. In such instances, the law states that an administrator may be appointed for the administration of the company by the court, a company, a liquidator in case of a private liquidation procedure, or a receiver.
It is worthy to note that a person shall not be appointed as an administrator of a company if that person is not qualified to be an insolvency practitioner. Act 2020 also provides that a person shall not be appointed as an administrator unless that person gives his consent in writing and does not withdraw it at the time of appointment; and the consent must be filed with the Registrar.
The administrator's role is to have control, investigate and manage the affairs of the company with the object of salvaging the business.
Further, Act 2020 explains that the powers of the administrator includes the following:
- begin, continue, discontinue and defend legal proceedings;
- carry on the business of the company to the extent necessary for the administration; and
- appoint any other person to act on behalf of the administrator to begin, continue, discontinue and defend legal proceedings.
However, it is important to note that the appointment of an administrator depends on the stage of distress where the company finds itself in.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
