What is a Notice of Intention (NOI) to Appoint Administrators?

Q: What is the legal foundation for giving notice of intention to appoint an administrator?

The legal framework for filing an NOI is set out in the Insolvency Act 1986 and subsequent amendments, including the Enterprise Act 2002. The legislation establishes the rights and responsibilities of directors, creditors, and insolvency practitioners in the administration process. Under the law, an NOI must be properly drafted and submitted in accordance with strict procedural rules. The notice must contain: The company’s details (name, registered address, and company number) The name and address of the proposed administrator(s) A statement confirming the intention to appoint administrators Evidence that any qualifying floating charge holders have been given the required five business days’ notice Failure to adhere to the legal requirements can result in the rejection of the NOI or potential legal challenges from creditors.

A Notice of Intention to Appoint Administrators (NOI) is a formal legal document submitted to the court by a company, its directors, or a qualifying floating charge holder (typically a bank). The notice signifies an intention to place the company into administration, which is a formal insolvency procedure that protects a business from creditor actions while restructuring options are explored.

Once an NOI is filed, a moratorium is triggered, preventing creditors from taking legal action against the company without court approval. This temporary protection allows the company and its appointed administrator time to assess the financial situation and determine the best course of action, which may include restructuring, asset sales, or a pre-pack administration. The NOI can be a crucial tool for struggling businesses seeking to avoid liquidation and preserve their operations.

What is the purpose of a Notice of Intention (NOI)?

The primary purpose of an NOI is to create a legal “breathing space” for a financially distressed company. By filing the notice, the company prevents creditors from enforcing their rights, giving directors and insolvency practitioners the opportunity to consider the best strategy for recovery.

The NOI serves as an early-stage measure to explore administration as an alternative to liquidation. It provides directors with time to engage with insolvency professionals, seek potential buyers for assets, or negotiate a company voluntary arrangement (CVA) with creditors. In some cases, companies may use this time to prepare for a pre-pack administration, where business assets are sold to a new company before administration formally begins.

Who can file a Notice of Intention in administration?

A Notice of Intention to Appoint Administrators can be filed by:

The company itself – Directors may decide to initiate administration as a means to rescue the business or to manage its debts in an orderly manner.
The directors – If they recognise that the company is insolvent or at risk of creditor action, directors can take proactive steps to seek administration.
A qualifying floating charge holder (QFCH) – This is typically a bank or secured lender with a floating charge over the company’s assets. The QFCH has significant influence over the process and can object to the proposed administrator if they disagree with the choice.

If a floating charge holder disagrees with the proposed administrator, they have the right to appoint their own, provided they act within the timeframe specified by insolvency law. In practice, this situation is rare as discussions often take place before an NOI is filed.

What is the effect when a Notice of Intention has been filed?

Once an NOI has been filed with the court, an interim moratorium period is immediately put in place. This means that creditors are legally prohibited from taking or continuing enforcement actions against the company without specific court approval. The key effects of filing an NOI include:

Protection from creditor enforcement – Creditors cannot issue statutory demands, winding-up petitions, or enforce security over the company’s assets.
Time for restructuring – The directors and proposed administrators have up to 10 business days to determine the best course of action.
Continuity of operations – The business can continue trading while alternative solutions are considered, provided the administrator deems this viable.

During this period, the company has the opportunity to explore restructuring options, secure investment, or prepare for a pre-pack administration.

How does an NOI relate to a moratorium?

A moratorium is a key feature of an NOI, as it provides a temporary pause on creditor actions. The moratorium lasts for an initial period of 10 business days, during which no legal action can be taken against the company without court approval.

This breathing space allows company directors and insolvency practitioners to explore viable options to restructure or sell the business. In some cases, an extension to the moratorium may be granted if additional time is needed to finalise a deal, but multiple extensions are generally discouraged by the courts to prevent abuse of the process.

What is the legal foundation for giving notice of intention to appoint an administrator?

The legal framework for filing an NOI is set out in the Insolvency Act 1986 and subsequent amendments, including the Enterprise Act 2002. The legislation establishes the rights and responsibilities of directors, creditors, and insolvency practitioners in the administration process.

Under the law, an NOI must be properly drafted and submitted in accordance with strict procedural rules. The notice must contain:

The company’s details (name, registered address, and company number)
The name and address of the proposed administrator(s)
A statement confirming the intention to appoint administrators
Evidence that any qualifying floating charge holders have been given the required five business days’ notice

Failure to adhere to the legal requirements can result in the rejection of the NOI or potential legal challenges from creditors.

What is the role of a Notice of Intention (NOI) during the administration process?

An NOI serves as the first step in the administration process, allowing the company and its advisors to prepare for the formal appointment of administrators. Once the notice is filed, the proposed administrator can begin assessing the company’s financial health and considering the best way forward.

During the moratorium period, the administrator’s role includes:

Reviewing the company’s assets and liabilities
Engaging with key creditors and stakeholders
Exploring options for business rescue or asset sales
Ensuring that the interests of creditors are prioritised

At the end of the moratorium period, the administrator takes full control of the company and decides on the most appropriate course of action.

How can you avoid liquidation?

Filing an NOI does not guarantee that a company will avoid liquidation, but it does create an opportunity to explore alternatives. Potential options to avoid liquidation include:

Pre-pack administration – Selling the business and its assets to a new company before entering formal administration.
Company Voluntary Arrangement (CVA) – Negotiating a repayment plan with creditors to allow continued trading.
Rescue financing – Seeking new investment or loans to stabilise the company’s financial position.
Operational restructuring – Reducing costs, renegotiating contracts, or streamlining business operations to improve financial viability.

By working closely with an insolvency practitioner, directors can identify the most suitable approach to preserving business value and avoiding liquidation.

Can an NOI Be Used as Part of a Pre-Pack Administration?

A Notice of Intention (NOI) is often an essential step in a pre-pack administration, where a business or its assets are sold to a new buyer before formal administration begins. This process can offer several benefits, including preserving jobs, ensuring business continuity, and maximising asset value before depreciation occurs. Additionally, it can help minimise the disruption caused by insolvency. However, to protect the interests of creditors, pre-pack sales must be conducted transparently and at fair market value.

What Is the Procedure for Filing a Notice of Intention?

Before filing an NOI, company directors must notify any qualifying floating charge holders (QFCH) at least five business days in advance. The notice must include details of the proposed administrator and be formally submitted to the court. This step ensures that key stakeholders are aware of the impending administration and have the opportunity to respond if necessary.

How Long Does the Notice of Intention Last?

Once an NOI has been filed, the company benefits from a moratorium period that lasts for 10 business days. During this time, creditors are prevented from taking legal action, giving the company a chance to explore restructuring or rescue options. In certain circumstances, the court may grant an extension, but multiple extensions are rare and only approved if there is a strong justification.

Are Multiple Notices of Intention Allowed?

A company can apply for an extension or, in some cases, file a second NOI if additional time is needed to finalise a recovery strategy. However, repeatedly using NOIs to delay creditor action may be viewed as an abuse of the court process and is unlikely to be permitted. The courts assess each case carefully to ensure that NOIs are used for genuine business recovery efforts rather than as a means of avoiding creditor claims indefinitely.

Why File a Notice of Intention?

Filing an NOI can provide crucial breathing space for a struggling company, allowing time to develop a restructuring strategy or prepare for a pre-pack administration sale. It offers temporary relief from creditor pressure and can help avoid an abrupt winding-up process. By securing this protection, directors and insolvency practitioners can explore the best course of action to maximise creditor returns and potentially save the business.

What Are the Powers of an Administrator?

Once appointed, an administrator takes full control of the company’s operations, financial affairs, and assets. They have the authority to negotiate with creditors, sell company assets to repay debts, and restructure or close unprofitable parts of the business. Their primary responsibility is to act in the best interests of creditors while assessing the most viable route forward for the company.

When Can’t a Notice of Intention Be Filed?

There are certain circumstances where an NOI cannot be filed. If a company has already entered administration within the past 12 months, it is not eligible to submit another NOI. Additionally, if a winding-up petition has already been filed against the company, an NOI can only proceed if the court grants permission. These restrictions ensure that the administration process is not misused and that legal protections are applied fairly.

What Happens Once a Notice of Intention Has Been Filed?

Once an NOI is submitted, the company gains legal protection against creditor enforcement actions, creating a temporary period where financial restructuring can be considered. However, this also means that directors will lose control of the business once an administrator is officially appointed. Creditors will be notified of the administration process and may need to engage with the appointed insolvency practitioner to discuss repayment and recovery plans.

Are There Any Disadvantages of Filing an NOI?

Although an NOI provides temporary protection, it also has potential downsides. Public knowledge of the company’s financial difficulties may impact supplier and customer confidence, potentially affecting ongoing trade. Additionally, directors must relinquish control of the business to the administrator, and the company’s future remains uncertain until a formal decision is made about its restructuring or potential sale.

How Can Chamberlain & Co Help You?

At Chamberlain & Co, we recognise the challenges directors face when dealing with financial distress and the prospect of administration. With over 25 years of experience in insolvency and business recovery, our team offers expert guidance to help businesses navigate the complexities of the administration process. Whether you require advice on filing a Notice of Intention, negotiating with creditors, or understanding your legal responsibilities, we provide tailored support to ensure compliance and achieve the best possible outcome for your company.

For further information and impartial advice, call us on 0113 242 0808 or email advice@chamberlain-co.co.uk