Administration – the English analogy of Chapter 11 reorganization .. save your company from business bankruptcy

‘Administration’ in UK or EU is akin to ‘chapter 11 reorganization’ in the US, a rescue mechanism to save insolvent companies from going into Business Bankruptcy and continue the business as a going concern. The role of ‘administrator’ is the same as the ‘trustee’ in US. However there are differences between US Law and English law in that the English law does not have the ‘debtor in possession’ concept and instead of the debtor running the business, it’s the administrator who carries on the business. Moreover, the concept of DIP financing does not exist. In Chapter 11 DIP financing, in any new financing the post-petition creditors get priority over pre-petition creditors in case of liquidity. As per English law, additional resource requirement has to be funded by existing creditors only. Hence, question of super-senior DIP financing does not arise.