VOLUNTARY ADMINISTRATION ('VA')

As an alternative to liquidation, directors of a company may believe it appropriate to place the company under VA. This could be because the directors wish to trade on and need time to restructure the old debt in order they may continue in the future, or it could be to avoid potential insolvent trading claims. VA’s provide the greatest level of flexibility in restructuring a company to maximise the return for creditors.

The process is highly regimented and strict time compliance requirements mean that directors must work with the Administrator (the person appointed to control the company during the VA period – similar to the liquidator) to propose a viable plan to repay creditors generally more than the creditors might reasonably expect to receive in a liquidation.

The VA process allows for trade on options, where the Administrator becomes personally liable for the debts incurred during the VA period.

Once the proposal has been formulated, and accepted by creditors, a legal document, a Deed of Company Arrangement is executed by the company and the Administrator, which then becomes a contract requiring performance from the directors.

Due to the complexities in administering Corporate Insolvency matters, we may not be able to deal with matters outside of Western Australia. However please phone to discuss this first.