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process begins with the appointment of an administrator whose function is to manage
the affairs of the company with the view of bringing it to profitability, or to achieve a
better result for the company‘s creditors than would be likely in winding-up, or
realizing property to distribute to secured or preferential creditors. An administrator
will have to fulfill the first objective and if it is not possible to proceed with the
second aim, and to move to the next if the second purpose could not be achieved. 15 It
is important to note that the duty to realize and distribute property to secured and
preferential creditors must be exercised so as not to prejudice the general creditors.
The administration procedures are consistent with the rescue culture with was
dominant in the 1990s. 16
It will benefit the company‘s creditors if the company is sold as a going concern at a
higher value compared to the sale of its assets in pieces. In this aspect, the role of an
administrator is similar to that of a receiver, although they owe a duty to different
parties. A receiver, whose duty is to the debenture-holder who made the
appointment, is not obliged to sell the company‘s assets at a higher price as long as
the debts owed to the secured creditor are discharged. An administrator, on the other
hand, owes his or her duty to the company for the benefit of general creditors.
The idea is to put the company in the hands of a third person, an administrator, who
will manage the affairs of the company, and if circumstances permit, rescue it as a
going concern 17 Often, an administrator makes suggestions for reorganization if he
or she believes that such a step would benefit the creditors. 18 During the
administration period, the administrator controls the assets of the company and most
15 Ibid.
16 Ibid.
17 Ibid, at [10-20]; see also at [1-21].
18 Ibid.
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