You've most likely heard about companies going 'into administration'. When this happens, it means they don't have the money they need to pay back their debts. In other words they are in serious trouble.

Administration is the step before bankruptcy because a company may still have some hope of recovery. The company is put into the charge of a court-appointed administrator to protect consumers and creditors, and protected from having to pay back their debts by the Insolvency Act of 1986.

The administrator will decide whether a rescue plan is possible, or if the company should be sold on as a business, or divided up and sold for its 'assets' or different parts. Sometimes this can raise more money to pay back creditors.

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