Which statement about administration is true?

Which statement about administration is true?

• A. Administration always ends in liquidation.
• B. Administration permits liquidation after a short delay.
• C. Administration prevents any rescue of the company.
• D. Administration does not permit liquidation while in force.

Answer: (D)

Administration creates a protective pause for the company, giving it space to be rescued or reorganised. This moratorium stops creditors from winding up the company or pursuing enforcement actions while the administration is in force. Because of that stay, liquidation cannot be pursued during the period of administration. The purpose is to give time to find a rescue plan or a better outcome for creditors, not to force liquidation immediately. If rescue fails, liquidation can still happen after the administration ends, but it is not permitted to proceed while the administration is ongoing. The other statements conflict with this protective aim: liquidation isn’t automatically carried out, and administration isn’t about guaranteeing liquidation after a short delay or preventing any rescue.

Administration creates a protective pause for the company, giving it space to be rescued or reorganised. This moratorium stops creditors from winding up the company or pursuing enforcement actions while the administration is in force. Because of that stay, liquidation cannot be pursued during the period of administration. The purpose is to give time to find a rescue plan or a better outcome for creditors, not to force liquidation immediately. If rescue fails, liquidation can still happen after the administration ends, but it is not permitted to proceed while the administration is ongoing. The other statements conflict with this protective aim: liquidation isn’t automatically carried out, and administration isn’t about guaranteeing liquidation after a short delay or preventing any rescue.