An Administration order is obtained following the presentation of an Administration petition (which is supported by a witness statement) by a company that believes that it can no longer resolve a financial crisis, or is likely to soon become unable to resolve a financial crisis if no action is taken. Following presentation of the petition by the company, the court will consider the witness statement in support and the independent person’s report. The court will, if it considers appropriate, grant an Administration order at the same time it appoints Administrators.

Administration is a rescue-oriented procedure, as it allows the company to continue its day-to-day operations away from the threat of a creditor action. This “breathing space” allows the company to put in place a strategy to work through a financial problem. During the course of the Administration, the Administrators will be responsible to the court, but they intend for Federal-Mogul’s management to have a special level of involvement. This will allow the Administrators to meet their responsibilities to the court while ensuring that the trading of the companies under their control continues as normal where appropriate.

The Administration procedure is collective in nature because it does not empower one creditor to the detriment of others, and requires the creditors to approve the strategy to rehabilitate the company.