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The main purpose of a Voluntary Administration is to provide a company with a viable alternative to winding up where there is scope for restructuring its financial affairs.

In some cases a Voluntary Administration is also considered where there are other concerns such as the maximisation of the asset values of a company in circumstances where any unreasonable delay will result in a significant reduction which is likely to impact on a return to creditors.

 

Benefits

  • Quick appointment by directors upon resolving that the company is insolvent or likely to become insolvent
  • Directors can consider making a proposal to creditors dealing with the restructuring plan for the company and an arrangement as to how it plans to repay or compromise its debts.
  • There is a moratorium or “free time” on any outstanding debts, except for secured creditors.
  • Provides an opportunity for the business to continue trading in the future and allows for a greater return to creditors than would otherwise be possible.