What is Voluntary Administration
The primary purpose of a Voluntary Administration (VA) is to provide a Company with a chance to trade out of its difficulties at a time when the Company is unable to pay its debts as and when they fall due.
A Voluntary Administration provides a Company with the procedure to attempt a compromise or arrangement with its Creditors through a Deed of Company Arrangement (DOCA), which may save the Company and related jobs while maximising the return to Creditors.
It is important to understand a Voluntary Administration and its desired outcome (i.e. an approved DOCA) will ultimately only succeed if the majority of Creditors believe it is in their best interests to allow the Company to enter into the DOCA, and therefore vote in favour of it.
Instrumental in this process is Creditors believing the Administrator has considerable experience and a reputation of impartially delivering optimum outcomes.
A VA involves the appointment of a Voluntary Administrator to a company. The Directors remain in place but their powers are suspended.
Creditors of the company vote to either end the VA, accept a DOCA proposal or place the company into liquidation.