Voluntary Administration #2 | Timeframe

Delving deeper into our topic of voluntary administrations, Chris Cook, Worrells Brisbane Principal, gives us an overview of the timeframe of voluntary administrations. Subscribe to stay up-to-date on the latest insolvency, bankruptcy and finance information from Worrells.


Welcome back to our second video, where we will talk more specifically about the time frame of a Voluntary Administration (VA). My name is Chris Cook, a principal at Worrells Brisbane. In our last video, I gave you a general overview of the Voluntary Administration process. Today, we will explore the timetable for the VA process. Let's step through the five steps of a VA.

The first step is the actual appointment of an administrator. The Voluntary Administration process starts with the appointment of an external administrator. This appointment can be made by the company's directors, an existing liquidator, or a secured creditor with a substantial charge over the company's assets, where they form an opinion that the company is insolvent or likely to become insolvent in the future. Upon appointment, the administrator's primary role is to take control of and protect the company's property, investigate the company's affairs, and ultimately provide a recommendation to creditors on the best future for the company.

Step two is the first meeting of creditors. Within eight business days following the appointment, the administrator must convene the first meeting of creditors. The objectives of this meeting are to inform the creditors about the administration process, make decisions regarding the appointment of a committee of inspection, and consider the replacement of the administrator if necessary. No other resolutions beyond these can be considered at this first meeting of creditors.

Step three is the investigation period and reporting to creditors. During this phase, the administrator conducts a thorough investigation into the company's business, assets, liabilities, and financial circumstances, along with investigations into any potential voidable transactions that may be recoverable should the company be put into liquidation. The administrator will work with the director to formulate a proposal for a Deed of Company Arrangement (DOCA), which will typically be designed to provide a better return than the alternative of liquidation. The administrator's primary role is to assess the DOCA, compare it to a liquidation scenario, and then prepare and issue a report to creditors, providing a summary of their investigations along with their recommendation as to which outcome, generally either a DOCA or liquidation, would provide a better return for creditors. The administrator plays an independent role during this period, balancing the interests of all stakeholders.

Step four is the second meeting of creditors. This meeting occurs within 20 business days of the appointment. It can be extended to 25 business days should the appointment occur in December or within 25 days before Good Friday. These periods can be extended under specific conditions. At this meeting, the administrator presents a detailed report that outlines the company's current situation and the options available for its future, including the execution of a DOCA, reinstatement of the company to its directors, or liquidation, and offers a recommendation as to which they believe would be the better outcome. The creditors then vote on the future direction of the company based on the information provided. In order to pass any resolutions at this meeting, it must be approved by a majority in number and value of those creditors voting, which means more than 50% of creditors voting at the meeting. In the event of a stalemate, the administrator has the option to exercise a casting vote to break the deadlock. The outcome of this vote is crucial as it determines the future of the company.

The fifth and final step is the decision and execution of the DOCA. Should the creditors vote in favor of a DOCA, it must be executed within 15 business days following the second meeting of creditors unless an extension is granted. Once fully executed, the agreed terms will be implemented and monitored. If liquidation is the chosen route, the Voluntary Administration phase transitions into a liquidation immediately, with the current administrator typically assuming the role of the liquidator.

Thank you for watching, and we'll see you in the next video where we'll cover the Deed of Company Arrangement (DOCA) and the general process of how they are proposed and implemented. Don't forget to subscribe to our channel to stay up to date on insolvency, finance, bankruptcy, and more.

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