what does going into administration mean?

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Ashers

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i noticed Zavvi have gone into administration, does that mean everything is being sold off dirt cheap, im very confused by what it means, and means to shoppers. or does it mean the shop has shut down?
 
It means that an administrator has been called in to run the business while a buyer is found for all or parts of the company.

As far as I know, in the case of Zavvi they have a supply problem because a lot of their goods were supplied by part of the Woolworth group, so they have a problem getting stock as a big supplier has gone.
 
i just wondered if it would mean things would be cheaper in there now? i need to buy a ps3 cheap as i can
 
Not necessarily, if anything they are only likely to be having the normal sort of sale thats on at this time of year.
At the moment as they are solvent and being sold as a going concern they have no need to shift stock.
 
ahh damn i need a ps3 for under 200 pounds and the only shop i know that does that is in liverpool
 
Being cynical, and talking of one who suffered the consequences of a business that went into liquidation, it means that the owners/managers of that business can absolve themselves of all financial and personal responsibility to all of their employees and debtors and walk away to set up another business under a new name without a care in the world.
 
barrypriddis said:
Being cynical, and talking of one who suffered the consequences of a business that went into liquidation, it means that the owners/managers of that business can absolve themselves of all financial and personal responsibility to all of their employees and debtors and walk away to set up another business under a new name without a care in the world.
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As happened many times in the 90's with those sofa and furniture companies. Then the directors are free to go and fleece customers again, and again. I thought the regulations had been tightened some what now though.
 
in the case of woolies, the administrator ges paid £millions IF they pay the debts....now tell me, take millions for settling debts, or take much less for selling the business as a going concern. i think woolies had enough bidders, how come it didnt get sold?
 
Zavvi are still trading as normal at the minute but they are looking for a buyer. I think it was because of the amount they owe Entertainment UK for stock.
 
In simple terms, 'Administration' normally happens when either a business has insufficient resources (cash or available credit lines) to pay its short term debts, or cannot provide adequate security for existing loans provided to fund the business.

Regarding Woolworths, the offers were probably significantly less than the net asset value of the business i.e. the Adminstrators could make more money for the creditors by selling stock, property etc than by selling the business as a going concern.
 
i blieve one invester offered to take the debt of woolies on with the purchase, i think the stumbling block was the huge amount of money that the administrator stood to LOOSE selling it to them!

Did anyone buy the entertainment distribution part? Zavvi owed that much cash
 
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