Is administration the same as going bust?

Not exactly. "Going bust" is everyday language for a business failing. Administration is one specific, formal insolvency process under the Insolvency Act 1986, and its first aim is to rescue the business, not close it. A company can enter administration and come out the other side trading, sold to a new owner, or wound down.

Who runs a company that's in administration?

A licensed insolvency practitioner called the administrator. They take over from the directors and run the company in the interests of its creditors. The directors stay in office but lose their power to manage the business without the administrator's consent.

Does a company in administration still trade?

Usually yes, at least for a while. Keeping the business running protects its value while the administrator looks for a buyer or a rescue. Some administrations are a controlled wind-down instead, but trading on is common.

How long does administration last?

It's designed to be temporary, normally ending within 12 months of appointment, though extensions are common. It ends when the company is rescued or sold, moves into liquidation, or is dissolved.

What is a pre-pack administration?

A pre-pack is where the sale of the business is arranged before the administrators are appointed, then completed immediately afterwards. It can preserve jobs and value but is controversial when the buyer is connected to the old owners, which is why it's subject to extra scrutiny.

Is administration the same as liquidation?

No. Administration aims to rescue or get the best result for creditors and often keeps the business trading. Liquidation winds the company up: its assets are sold, creditors are paid in legal order, and the company is dissolved. A company sometimes moves from administration into liquidation.

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What does it mean when a company is “in administration”?

By the administrator.uk editorial teamLast reviewed 4 June 2026

When a company is “in administration”, control passes from its directors to a licensed insolvency practitioner called the administrator, who runs the company under legal protection. It is a formal rescue process under the Insolvency Act 1986: the aim is to save the business, or failing that to get a better result for creditors than simply closing it would. While it lasts, a legal freeze (a moratorium) stops most creditors taking action against the company without permission.

You've probably landed here because you saw the phrase on a customer's account, a supplier's record, or in a headline. Here's what it actually means, why it happens, and what changes.

The basics

Who takes over, and what changes

The defining feature of administration is the change of control. A licensed insolvency practitioner is appointed as administrator and takes over the running of the company. The directors remain in office but can no longer manage the business without the administrator's agreement. From the outside, the company often looks the same: the same staff, the same premises, the same products. Legally, someone new is in charge and running it for the benefit of creditors.

The other defining feature is the moratorium. From the moment of appointment, creditors generally can't start or continue legal action, repossess goods, or wind the company up without the administrator's consent or the court's permission. That breathing space is what gives the administrator time to find the best outcome.

The purpose

Why a company enters administration

The law sets the administrator three objectives, in order of preference:

Rescue the company as a going concern, so the business survives largely intact.
If that's not achievable, get a better result for creditors as a whole than an immediate winding-up would.
If neither is possible, realise the company's property to pay secured or preferential creditors.

In practice, many administrations end in a sale of the business or its assets to a new owner, sometimes arranged in advance as a pre-pack. The brand and the workforce may carry on under new ownership even though the original company doesn't.

For everyone else

What it means if you deal with the company

Administration changes where you stand depending on your relationship to the company:

If you're owed money, your debt becomes a claim in the administration, and where it ranks decides how much you see. See the order in which debts are paid and the creditor checklist.
If you work there, the appointment doesn't automatically end your job, and statutory pay can be covered by the National Insurance Fund. See what happens to staff.
If you're a customer, the business may keep trading and honour orders, or it may not, depending on the administrator's plan. See whether a company in administration still trades.

Don't confuse them

Administration vs liquidation

The two are often muddled. Administration is about rescue and protection: keeping options open, often keeping the business trading. Liquidation is about closure: selling off the assets, paying creditors in legal order, and dissolving the company. A company can move from one to the other: administration sometimes ends by passing the company into liquidation. The full comparison is in administration vs liquidation vs CVA.

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Frequently asked

Common questions

Is administration the same as going bust?: Not exactly. "Going bust" is everyday language for a business failing. Administration is one specific, formal insolvency process under the Insolvency Act 1986, and its first aim is to rescue the business, not close it. A company can enter administration and come out the other side trading, sold to a new owner, or wound down.
Who runs a company that's in administration?: A licensed insolvency practitioner called the administrator. They take over from the directors and run the company in the interests of its creditors. The directors stay in office but lose their power to manage the business without the administrator's consent.
Does a company in administration still trade?: Usually yes, at least for a while. Keeping the business running protects its value while the administrator looks for a buyer or a rescue. Some administrations are a controlled wind-down instead, but trading on is common.
How long does administration last?: It's designed to be temporary, normally ending within 12 months of appointment, though extensions are common. It ends when the company is rescued or sold, moves into liquidation, or is dissolved.
What is a pre-pack administration?: A pre-pack is where the sale of the business is arranged before the administrators are appointed, then completed immediately afterwards. It can preserve jobs and value but is controversial when the buyer is connected to the old owners, which is why it's subject to extra scrutiny.
Is administration the same as liquidation?: No. Administration aims to rescue or get the best result for creditors and often keeps the business trading. Liquidation winds the company up: its assets are sold, creditors are paid in legal order, and the company is dissolved. A company sometimes moves from administration into liquidation.