Voluntary Administration is a useful tool to financially restructure a fundamentally good business, which for whatever reason is burdened with too much debt.
When a company is placed into Voluntary Administration, the appointed Voluntary Administrator must hold two meetings of creditors to determine the future of the company in administration.
The first meeting is held with 8 business days of the appointment and the second meeting is held within 20 business days (or 25 business days if the appointment is in December or less than 25 business days before Good Friday) after the appointment of the Administrator.
During the period between the appointment of the Administrator and the second meeting of creditors, creditors are able to contact the Administrator’s office at any time to seek information on any queries or concerns they may have. A common concern amongst creditors is whether the business is still trading and whether they should continue supplying to the company. The Administrator will be able to provide the answer to this on a case-by-case scenario at the start of the administration.
During the second meeting, creditors will be asked to vote on the following options for the future of the company:
- That the company execute a Deed of Company Arrangement (“DOCA”) (the terms of a DOCA will vary case-by-case and creditor are encourage to read and consider the details provided to them in the creditors’ report);
- That the administration ends and the control of the company is returned to the directors of the company; and
- That the company be wound up and placed into liquidation.
Prior to the meeting, creditors are encouraged to submit any queries and concerns that they wish to be discussed during the meeting to the Administrator in advance so that the Administrator can better provide an informative response during the meeting. Creditors will also have an opportunity during the meeting to ask questions.
Whilst voting is not strictly required of each creditor, it is highly recommended that all creditors participate in this process.
How we can help
If you have clients that could potentially benefit from a Voluntary Administration, please feel free to contact us for a complimentary, obligation-free consultation.