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A light touch Administration essentially refers to administrations in which the Directors to continue to have some power to run the company during the administration, while the administrators only take a ‘light touch’ approach. Directors will continue to take on some management duties and, in this way, the directors may implement the administrator’s decisions but also make some management decisions themselves, within restricted Parameters.

In administration, paragraph 64(1) of Schedule B1 to the Insolvency Act 1986 (IA 1986) prohibits directors from exercising management power without the consent of the administrator. In a light touch administration, an administrator gives consent (whether general or specific) to the continuing management of the company by the existing directors under the administrator’s supervision, without the need to seek creditor approval. Administrators can also appoint and remove directors (IA 1986, Sch B1, para 61).

A light touch administration is usually suited to a situation where the administrators consider the company can be rescued as a going concern (under IA 1986, Sch B1, para 3(1)(a)). The company can benefit from the administration moratorium