What is a consequence of an administration order being in force?

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Multiple Choice

What is a consequence of an administration order being in force?

An administration order creates a protective moratorium that allows the company to be managed by an administrator while options for rescue or a better outcome for creditors are explored. Because of this moratorium, winding up (liquidation) petitions cannot proceed during the administration without the administrator’s consent or a court order. That is why the consequence stated—cannot be put into liquidation while the administration order is in force—is the correct one. Directors do not retain full free control under administration; the administrator takes charge of the company’s affairs, though it isn’t accurate to say they lose all power in every sense. The other options clash with the purpose and effect of the moratorium: liquidation isn’t automatic, there isn’t a mandatory 30-day assets distribution, and the director’s loss of all control is overstated.

An administration order creates a protective moratorium that allows the company to be managed by an administrator while options for rescue or a better outcome for creditors are explored. Because of this moratorium, winding up (liquidation) petitions cannot proceed during the administration without the administrator’s consent or a court order. That is why the consequence stated—cannot be put into liquidation while the administration order is in force—is the correct one.

Directors do not retain full free control under administration; the administrator takes charge of the company’s affairs, though it isn’t accurate to say they lose all power in every sense. The other options clash with the purpose and effect of the moratorium: liquidation isn’t automatic, there isn’t a mandatory 30-day assets distribution, and the director’s loss of all control is overstated.

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