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As a company director, it is important to understand the voluntary administration process, which is a formal insolvency process designed to help a company in financial distress to restructure and potentially continue trading.

Here are the key aspects of the voluntary administration process from a director’s perspective:

  • Initiation: The voluntary administration process can be initiated by the company directors themselves or by a secured creditor. Once the process has been initiated, the company enters a period of voluntary administration.
  • Administrator appointment: An Administrator is appointed to take control of the company’s affairs and investigate the company’s financial position. The Administrator’s role is to assess the company’s viability, report to creditors, and provide a recommendation to creditors regarding the options for the future of the company. 
  • Directors’ duties: While the company is in voluntary administration, the directors’ powers are suspended, and they must cooperate with the Administrator to help with the investigation and proposal development. Directors must also ensure that the company’s books and records are up to date and that they provide the Administrator with any necessary information.
  • Proposal development: The directors then develop a proposal for the company’s future (called a Deed of Company Arrangement, or DOCA for short), which could include a compromise with creditors, a sale of the business or its assets, or a restructuring plan. The proposal will be put to creditors for a vote.
  • Administrator’s report: The Administrator prepares a detailed report comparing the intended outcomes of the DOCA proposal with a liquidation scenario and provides a recommendation for creditors to use a guide on how to vote.
  • Creditors’ meeting: A meeting of creditors will be held to consider the DOCA proposal, and creditors will have the opportunity to vote on it. The proposal must be approved by a majority of creditors by number and value to be accepted.
  • Return to control: If the DOCA proposal is accepted, the company will exit voluntary administration, and control will be returned to the directors. If the proposal is not accepted, the company may be placed into liquidation.
  • Completion of the DOCA terms: Once all of the terms of the DOCA have been met, the Deed Administrator then distributes the funds on hand to the creditors and concludes the engagement.

It is important for directors to seek professional insolvency advice early on in the process and to cooperate fully with the appointed Administrator to increase the chances of a successful outcome.

To speak with us further regarding whether a Voluntary Administration may be appropriate in your situation, please contact us on 08 9215 7900 for a cost and obligation free consultation.

If you would like to learn more about Voluntary Administration, feel free to download our free E-Book below:


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