Voluntary Administration

Voluntary administration allows the company breathing space to deal with creditors in an orderly manner and prepare a proposal to give the best return to stakeholders. It may allow a company to stay out of liquidation whereby an independent person is able to review the company’s affairs and deal with the pressures of creditors.

How do I know Voluntary Administration is right for my business?

Our experts can assess your situation to see if Voluntary Administration is the right solution for you. Some common warning signs for your business may include:

• • Continuing losses
  • Overdue taxes
  • Not being able to obtain further finance from your existing or alternative banks
  • Suppliers placing your business on COD or demanding payment before further supply is made or demanding payment plans
  • Not paying your creditors withing agreed terms
  • Making rounded payments not against specific invoices
  • Threats of legal action or legal action for debt recovery
  • Not being able to produce timely and accurate accounts

What is Voluntary Administration?

Voluntary Administration is an insolvency process which aims to resolve the company’s future as quickly as possible. The voluntary administration process is aimed at providing better returns for the company’s creditors and members than if a company were immediately wound up.

When company directors suspect that their company is insolvent or may become insolvent, an administrator should be appointed as quickly as possible in order to maximise the chances that the business will survive.

Typically a voluntary administration lasts between 25 to 30 business days. At the end of a voluntary administration, the company usually enters into a Deed of a Company Arrangement (also known as DOCA) with its creditors or may be placed into liquidation.

What causes a Voluntary Administration?

Voluntary Administration could occur due to a number of reasons. This could include a situation where the directors of a company suspect that the company is insolvent or likely to become insolvent at some future point in time. While less common, a secured creditor who is entitled to enforce a security interest over the company’s property, may also appoint a voluntary administrator in order to seek recourse.

Where there are pressures from creditors demanding payments for debts and company directors are at personal financial risk of insolvent trading or where pressures from banks or secured creditors demanding payment, a voluntary administrator may also be appointed. Furthermore, where there are disputes between directors or shareholders or where any legal action or event that may jeopardise the company, voluntary administration could be used as a mechanism to resolve these issues.

What are the expected outcomes of a Voluntary Administration?

The voluntary administration process reduces the possibility of secured creditors proceeding against the assets of the company. At the end of the administration, the company usually enters into a Deed of Company Arrangement (DOCA) with its creditors or it is placed into liquidation.

If the Deed of Company Arrangement (DOCA) suggests that the company will continue to trade (also known as a ‘trade-on’), the control of the company usually returns back to the company directors. Of the Deed of Company Arrangement is approved by creditors, it will eliminate possible insolvent trading claims

How can SV Partners help?

SV Partners are highly skilled in assessing a business’ financial position and provide tailored solutions for every situation. Our role in the voluntary administration process is to trade the company’s business if appropriate, investigate the company’s affairs and report to creditors on the company’s affairs. We understand that a voluntary administration not only affects the owners and directors of a business, it can also have a long lasting impact upon its employees, creditors and shareholders.

SV Partners has considerable experience in voluntary administration matters across a range of industries and businesses. Our team of experts can provide your organisation with the necessary support in liaising with creditors and finding the best possible outcome for all stakeholders.

For more information on voluntary administrations, visit our FAQ section or alternatively to speak confidentially to an expert that can assess your situation, call 1800 246 801.