There are many reasons why a company may fail. Before we start to examine them, it is worth taking some time to understand the key terms surrounding this subject, namely liquidation, insolvency and administration. ‘HMV calls in the administrators!’ was the headline in the Guardian back in January 2013. If you had not studied business, you might be forgiven for thinking that all HMV stores would close immediately. However, in March 2014 there were still 133 HMV stores operating across the UK. Which raises the question, what exactly does administration mean?
■ Administration: a limited period of time during which the management of an insolvent company is passed over to a team of external administrators. This team will attempt to formulate a strategy to save the company and repay its debtors.
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