Sharp Daily
No Result
View All Result
Friday, June 6, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home Investments

Why Administration Is Not A Death Sentence Against Insolvent Companies

Domenic Ntoogo by Domenic Ntoogo
October 31, 2022
in Investments
Reading Time: 2 mins read
Administration

[Photo/ Courtesy]

For some Kenyans, the term administration on an insolvent company is synonymous with liquidation or dissolution. As such, most companies that file for an administration end up acquiring the tag of being ‘broke’ from the public and media. The consequences of this are it scares away partners, with investors being scared as they may fear investing in a company that cannot pay its creditors.

Read: Investors in CHYS/CPN Want Administrator Removed

What is administration?

However, an administration is more positive than it has been made to look. The administration of an insolvent company refers to putting such an organization under a competent manager to restore normalcy and help the company meet its financial obligations, according to Koya & Company Advocates.

Once a company has been put under administration, the administrator oversees all its activities with the sole aim of ensuring that it repays all its creditors in a period of uninterrupted activities. In a nutshell, the administration seeks to ward off the extreme consequence of liquidation.

RELATEDPOSTS

Turning liabilities into assets: A smarter approach to managing your finances

January 13, 2025

Evaluating the best methods for acquiring assets

December 20, 2024

Advantages of administration

Good for creditors

Liquidation (the process by which a company distributes its assets to creditors and claimants) is always a chaotic endeavour. This is because creditors seek to regain their investments in whichever way possible, which is not always possible in the end. Thus administration helps to forge a smooth distribution of investors’ dues through the watch of the assigned administrator.

Read: NSSF Not Sufficient To Offer Consistent Source Of Income Post Retirement – Cytonn Report

Saves jobs

An Administration also saves jobs for employees working under the insolvent company and its affiliates. The failure to put an insolvent company under administration will likely lead to the total dissolution of the company in the aftermath. Thus, employees are assured of their jobs when their company is under administration and trying to get back on its feet.

Legal immunity

An administration period is always a sigh of relief to the insolvent company since it enjoys a spell of legal immunity. The creditors are barred from taking any legal actions against the entity, especially the push for liquidation. However, a court can rule in favour of a creditor seeking liquidation if the administrator declares that the company cannot meet its obligations even by the lapse of the administrative period.

Allows restructuring

This is the main reason why a company seeks administration. An entity gets the freedom to restructure its operations undisturbed, which includes doing away with unnecessary spending. Such restructuring is impossible when a company is operating under the threat of liquidation.

Email your news TIPS to editor@thesharpdaily.com

Previous Post

How To Build An E-commerce Business

Next Post

Rwandese Taxi Firm YEGO Launches Operations In Kenya

Domenic Ntoogo

Domenic Ntoogo

Related Posts

Investments

Decoding stock-based compensation

June 4, 2025
Investments

Navigating the money market and fixed income funds landscape

June 3, 2025
Investments

Foreign influence in Kenya’s credit crisis

May 28, 2025
Investments

SACCO’s at the heart of rural financial inclusion in Kenya

May 22, 2025
Investments

Real yields vs. nominal yields on Kenya’s government bonds

May 21, 2025
Investments

Knight Frank: Kenya’s wealthy swap mansions for market moves

May 19, 2025

LATEST STORIES

How Kenya’s E-Mobility shift could redefine urban planning

June 5, 2025

Economic liberators are the real heroes and heroines of the year

June 5, 2025

Affordable retirement planning for small businesses with CURBS

June 5, 2025

How Kenyan banks can modernize without marginalizing

June 4, 2025

Human rights concerns over activists’ treatment in Tanzania

June 4, 2025

Decoding stock-based compensation

June 4, 2025

Comparative advantage is the secret to real economic take off

June 4, 2025

Understanding inflation and its impact on everyday life

June 4, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024