Voluntary Administration

If you own a company and its currently insolvent or likely to become insolvent, a Voluntary Administration provides an option for a company to obtain some breathing space and to formulate a plan to restructure its financial affairs through a Deed of Company Arrangement.

Voluntary administration can be quickly and inexpensively implemented by a resolution of directors.

Immediate protection

Voluntary Administration is designed to keep a business together and operating until an Administrator has had the opportunity to assess the financial position of the company and prepare a report to creditors which is normally presented at the second meeting of creditors on day 28 of the voluntary administration process.

The Administrators' report will include a recommendation on any proposal for a Deed of Company Arrangement. Recovery action by creditors is frozen, unless the creditor obtains the permission of the Court or the Voluntary Administrator:

• Leased and hired equipment cannot be repossessed;
• Reservation of title stock cannot be removed;
• Contracts such as franchise agreements can not be terminated;
• The business can not be forced to vacate leasehold premises;
• Secured lenders cannot enforce their security except in limited circumstances.

At the end of the Voluntary Administration process (normally day 28) creditors will vote at the second meeting of creditors on the 3 possible outcomes for the company:

• Return control to the directors; or
• Accept a Deed of Company Arrangement; or
• Place the company into a Creditors' Voluntary Liquidation