A Voluntary Administration is a legal appointment under the Corporations Act to give companies an opportunity to implement a restructuring plan with their creditors rather than going straight into liquidation. The appointment of an administrator (who must be a licenced insolvency practitioner) will create a moratorium for a period of between 25 or 30 business days, during which time the company’s directors can put a proposal to the company’s creditors to compromise the debts of the company. Within this moratorium period the administrator will assume control of the company and will make all decisions on the behalf of the company. The director’s powers will be suspended during the administration period. If the director’s proposal to settle the debts is accepted the company will transition into a Deed of Company Arrangement (link to what is a Deed of Company Arrangement?) If the director’s proposal is not accepted the company will most likely be voted into liquidation by creditors.
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