Where the directors of a company become aware that the company is insolvent or is likely to become insolvent they may decide to appoint an independent insolvency practitioner called a ‘voluntary administrator’. The role of the voluntary administrator is to investigate the company’s affairs, to report to creditors and to recommend to creditors whether the company should enter into a deed of company arrangement, go into liquidation or be returned to the directors. The primary advantages of voluntary administration are that:
- it provides temporary protection from creditors to the company during which a decision can be made on whether or not the company is able to be successfully restructured; and
- helps to prevent the directors of the company from being potentially liable for any losses suffered by creditors due to ‘insolvent trading’.
If you require legal advice in relation to any aspect of voluntary administration, please contact us to arrange a meeting so that we may consider your specific circumstances.
The above information is provided as general information only and should not be relied upon as legal advice. The accuracy of this information may have changed from the date when it was published.