Voluntary Administration (VA)

Sometimes when you’re suffering financial stress all you need is a little time to get your affairs sorted out. If you’re experiencing cash-flow or solvency issues, voluntary administration is a process that gives you some respite from creditors while allowing you to restructure.

What is it?

Voluntary administration is a short period of time – usually around one month – where directors of a company hand over control to an independent administrator, known as a voluntary administrator. The process allows for an arrangement to be proposed to creditors on whether they should liquidate the company, execute a deed of company arrangement or return the company to the control of the directors. The final decision on the company’s future rests with the creditors.

The process

Once the administrator takes control of your business the directors lose their power to contract on behalf of the company. Any trading debts that are incurred after the appointment of the administrator become the personal liability of the administrator.

The administrator also communicates with all stakeholders at the start of the VA process, advising of the appointment and of the steps needed if they wish to make a claim on the assets of the company.

Once you hand over control to an administrator, your company’s destiny is in the hands of the creditors. While the administrator recommends the course of action, the creditors are the ones with ultimate power.

Three outcomes are possible:

  • the company is returned to the directors (this is rare)
  • the company is placed into liquidation
  • a Deed of Company Arrangement is enacted

What you need to do

If you want to appoint an administrator, your company directors will need to pass a board resolution.

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