Voluntary Administration: Process & Steps Explained
- Posted by: Admin
- Categories: Industry Insights, News
If your company is facing financial difficulty — for example, an excess of unpaid debts — you may opt to enter voluntary administration. In this event, your company is placed in the hands of an independent party — the Administrator, who will provide the business with ‘breathing space’ from normal operations and commitments. The Administrator will work closely with you, creditors and suppliers to assess the option available for restructuring the business and deliver the best outcome possible.
The process of voluntary administration
Unlike liquidation — which results in the immediate truncation of the business — the voluntary administration process usually avoids the involvement of the courts; helps your company repay its debts, and when possible — escape insolvency.
A timeline of voluntary administration
Voluntary administrations are easy to begin and fairly fast, with the entire process typically wrapped up in just over a month. This short timeline is designed to deliver rapid resolutions while also providing stakeholders with enough time to receive relevant information.
- Appointing an administrator — The administrator is chosen by the directors, or sometimes, a secured creditor or a liquidator.
- Administrator takes control— On appointment, the Administrator is responsible for running the business and personally liable for new debts incurred in carrying it on. The Administrator will assess the business’s viability. In some cases, the business has to stop trading.
- The first meeting of creditors — Eight days after the administrator is appointed, creditors meet and can vote to replace the administrator (usually with another, nominated by a creditor) and/or form a committee of inspection who work closely with the administrator.
- Administrator’s investigation and report — This investigation focuses on the affairs of the company and where they stand with existing debts. The findings are then reported to the creditors, along with a recommendation about the company’s future, decided at the second meeting of creditors.
- Second meeting of creditors — Typically, the administrator is required to hold a meeting to determine the businesses’ future within 25 business days of being appointed. At this meeting, creditors are presented with three options: put the company into liquidation, return the company to the director’s control or accept a Deed of Company Arrangement (DOCA). A DOCA is a binding agreement that compromises or adjusts debts and the order in which creditors are to be paid.
Speak to our voluntary administration experts today
FerrierSilvia’s team of highly qualified and experienced practitioners will act swiftly and responsively to provide you with expert advice and innovative solutions. If you’re facing voluntary administration, get in touch with FerrierSilvia to ensure you have the best in your corner.