An administration can be structured and carried through to its conclusion in any number of ways. In part, it depends on the nature of the business, but also where it is based and who its creditors might be.

Here we discuss five major administrations of recent years to explain how different situations are resolved and why some high-profile companies went through the processes they did.

Rover

Rover is one of the most high-profile administrations of recent years, with PricewaterhouseCoopers appointed in 2005. The loss of 6,000 jobs at a site in a marginal seat meant it was highly politicised, not the least by virtue of the fact that it symbolised the demise of the UK car industry and raised political questions about its sale to Phoenix several years prior.

'It also had some of the same European dynamics as Collins & Aikman, in that it had a sales network abroad. Again it used the same centre of main influence to hold that business together,' says Bloom.

TXU

TXU, the power giant, was one of the bigger administrations of recent years, handled by Ernst & Young and KPMG jointly. It had debts of around £5bn in its operating and management companies.

The process took two-and-a-half years, from an administration filing in November 2002 to a resolution of creditor issues in January of 2005. It involved a disposal of remaining assets for £1bn, and complicated rows with creditors, over accounting issues and priority arrangements for being paid.

The interesting point to note, according to Bloom, who was involved in the administration, was the use of a CVA.

'In a more complicated situation you can use it as a mechanism for binding creditors.,' Bloom says.

Collins & Aikman

Collins & Aikman, the automotive components company, went into administration in 2002. The US arm entered Chapter 11, while the European arms of the business all went into one administration process handled by Kroll.

The case was interesting, says Alan Bloom, head of corporate restructuring at Ernst & Young, because it used new European rules on establishing a 'centre of main influence.'

'It was driven as a UK administration, despite it being based in different countries. Under European legislation you can designate a place from which the main proceedings take place. Then you can use the UK [or other EU member state] administration process. When you are trying to hold something together in a number of countries, that's a very valuable tool,' he says.

Since Collins & Aikman had many locations, and all were interdependent, that was the best way to manage it.

Powerhouse

Martha Thompson, Partner at BDO Stoy Hayward was appointed as one of the administrators for Powerhouse in August 2006. Powerhouse was a national chain of electrical superstores. It had 50 stores across the country and employed 650 staff.

The administrators conducted an immediate review of the business and came to the conclusion that it was necessary to close all 50 stores with immediate effect. This decision meant that 500 staff were made redundant.

Thompson says, 'There were many challenges that influenced the way in which we dealt with the administration. First, there were many customers who had paid for electrical goods, which needed to be investigated since it was decided that, where possible, all customer orders would be honoured. The other challenge was in relation to the landlords who owned the Powerhouse stores. A Company Voluntary Arrangement was already in place, which bound the landlords of a further 30 stores which were closed in order to maximise survival going forward. We focused on achieving value for the leases, and this proved successful.'

Heath Lambert

Some companies are opting for pre-pack administrations. Insurance broker Heath Lambert's management company went into administration in 2005 on this basis.

Such arrangements are useful in circumstances 'where businesses are going to deteriorate quickly' says Bloom.

Heath Lambert would have lost a lot of customers overnight without the process. Its management company went into administration, placing, controversially, its pension deficit into the Pension Protection Fund (PPF). Its businesses were sold to a new holding company, in which the PPF took shares.

'You can only do them in certain situations, in people businesses. Dealing with a precarious business you have to get on with it, and sell the stock off quickly,' Bloom says.