Role, powers, functions and duties of an administrator

Published by a ��Ƶ Restructuring & Insolvency expert

Practice notes

Role, powers, functions and duties of an administrator

Published by a ��Ƶ Restructuring & Insolvency expert

Practice notes

The role, functions, powers and duties of an administrator are set out in the Insolvency Act 1986 (IA 1986) and Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024.

While the Enterprise Act 2002 (EnA 2002) significantly amended the old administration regime, the administrator’s powers and duties under the old regime were not overruled entirely. They still apply to all administrations pre-September 2003 and to administrations of certain entities set out under EnA 2002, s 249 such as building societies and rail companies.

This Practice Note focuses on the position after 6 April 2017.

The administrator's role and functions

An administrator may only be appointed as administrator of a company if they are qualified to act as an insolvency practitioner in relation to the company.

The administrator’s objective is to achieve one of the three purposes of administration as set out in IA 1986, Sch B1, para 3. In doing this, the administrator acts for all creditors not just the entity that appointed them. They are an officer of the court, whether

Jurisdiction(s):

United Kingdom

Key definition:

Insolvency definition

What does Insolvency mean?

This can be defined by two alternative tests (Insolvency Act 1986, s 123):

• cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);

• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.

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