Administration – Tempora Legal

What is Voluntary Administration?

If you believe that your company is, or likely to become, insolvent, then to resolve the company’s financial position you may consider appointing a company administrator. We generally discuss administration below. Send us an enquiry for advice on company administration.

Companies most commonly go into administration voluntarily. However, on some occasions the company liquidator, provisional liquidator or secured creditor may appoint an administrator over the company. Voluntary Administration may be an appropriate way for your company to resolve its debts with creditors and continue to trade.
Before considering whether to place your company into administration, the first step to consider is whether your company is, or is likely to become, insolvent. Simply, is, or will, your company be unable to pay its debts as and when the debts fall due? We can advise you on this by liaising with tax accountants in Perth, Western Australia on behalf of your company. Depending on the company’s financial position, we may also be able to assist your company by attempting to negotiate an informal outcome directly with the company’s creditors.
If the company has a large number of creditors, conducting a financial reconciliation and attempting to negotiate with the various creditors may be very expensive. In such circumstances, it may be appropriate to consider appointing an administrator. We have established relationships with insolvency practitioners in Perth, Western Australia who we can liaise with on your company’s behalf in appointing an administrator. But why appoint an administrator in the first place?
When you appoint an administrator, they will effectively assume your role as a director of the company and carry out their obligations as a company administrator under the Corporations Act 2001 (Cth). The purpose of appointing a company administrator is to place the company in the best possible position to repay its creditors.
The administrator will host a meeting within 8 days of being appointed with the company creditors to allow the creditors to vote to either replace the appointed administrator or to create a group of creditors who will liaise with the administrator to resolve the company’s debts. The administrator will then begin to investigate the affairs of the company and will issue a report of their findings to the group of creditors. The report should include recommendations by the administrator as to the appropriate next steps. For instance, the administrator may recommend the company should continue trading or that the company should be wound up.
Within 25 to 30 days after the administrator was appointed, a second meeting will occur with the group of creditors to vote as to the fate of the company. The creditors can vote to either: place the company into liquidation; have the company enter into a Deed of Company Arrangement; or return the company to the directors. The administrator is entitled to receive fair remuneration from the company’s assets for their services in administering the company.
A deed of company arrangement is a binding agreement between a company and its creditors governing how the company’s affairs will be dealt with. You may have some say in the conditions of a deed of company arrangement. The arrangement is administered by the deed administrator (usually by the registered insolvency practitioner who was the administrator).
If you would like us to advise you on whether placing the company in voluntary administration is appropriate in your company’s circumstances, send us an enquiry. Otherwise, continue researching on our website for more information. We discuss deed of company liquidation next.

+61 (0)4 9216 1121

PO BOX 26, Beechboro, Perth, Western Australia 6063