What is Voluntary Administration?
Voluntary Administration is a statutory process under the Corporations Act 2001 that provides struggling companies with breathing space to restructure their affairs and determine their future direction.
This process involves appointing an independent administrator to assess the company’s position and recommend the best path forward for all stakeholders.
When Should You Consider Voluntary Administration?
- Your company is experiencing financial difficulties or is insolvent
- Directors need protection from personal liability for insolvent trading
- The business requires temporary relief from creditor pressure
- There’s potential for business restructuring and turnaround
- A more favourable outcome than immediate liquidation is possible
The Voluntary Administration Process
Court Appointed Receivers
Directors, a liquidator, or a secured creditor appoints an independent registered liquidator as the voluntary administrator.
First Creditors' Meeting
Held within 8 business days of appointment to confirm the administrator’s appointment and potentially form a committee of creditors.
The administrator investigates the company’s affairs and considers possible outcomes for creditors.
Usually held within 20-25 business days where creditors decide the company’s future.
Possible Outcomes
Deed of Company Arrangement (DOCA)
A formal agreement between the company and its creditors outlining how the company’s affairs will be restructured.
The company returns to director control if it’s found to be solvent (rare outcome)
If no better alternative exists, the company proceeds to liquidation.
How We Can Help
Our experienced insolvency team provides comprehensive support throughout the voluntary administration process:
- Initial consultation and assessment of your company’s position
- Guidance on directors’ duties and obligations
- Assistance with administrator appointment
- Support throughout the administration process
- Strategic advice on restructuring options
- Representation in creditor negotiations
Common Q&A
Q: What happens to the company during voluntary administration?
An independent administrator takes control of the company’s business and assets while a moratorium is placed on creditor claims to allow time for restructuring.
Q: Who can appoint a voluntary administrator?
A voluntary administrator can be appointed by the company’s directors, a liquidator, or a secured creditor holding security over the whole or substantially whole of the company’s property.
Q: What is a Deed of Company Arrangement (DOCA)?
A DOCA is a formal agreement between a company and its creditors that sets out how the company’s affairs will be managed to provide better returns than immediate liquidation.
Q: Can secured creditors take action during voluntary administration?
Secured creditors have 13 business days from the administrator’s appointment to exercise their rights, after which they need either the administrator’s consent or court permission.
Q: What happens to employees during voluntary administration?
Employment contracts remain in force while employee entitlements are protected and given priority in any distribution.
Q: How long does voluntary administration last?
The standard voluntary administration period lasts approximately 25-30 business days from appointment to the second creditors’ meeting.
Note: The information on this page provides a general overview and should not be taken as legal advice. Each matter is unique and requires specific legal analysis based on individual circumstances.