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Voluntary Administration Sydney

Give your company its best chance to avoid insolvency with a voluntary administration

Guiding You Through the Voluntary Administration Process in Sydney

When companies are facing financial distress, it can be a stressful and difficult situation to be in. In the 2017-18 financial year, 11,057 companies in Australia were reported as being in external administration with 3,481 of those in New South Wales. Fortunately, when faced with insolvency, as a company director you do have options. Before initiating a formal insolvency appointment, you could choose to try a business restructure or turnaround strategy. These strategies may increase cash flow and return your company to profitability while avoiding Liquidation.

If a turnaround or restructure hasn’t worked, your next step is Voluntary Administration. Voluntary Administration (VA) is available to all Sydney-based companies in difficult financial circumstances to help avoid insolvent trading. It is a process where an insolvent company, or a company facing insolvency, is placed in the hands of an independent person (the Administrator) who assesses all of the options available and generates the best outcome for all parties involved.

The primary purpose of VA is to provide you with a flexible procedure which enables your company time to attempt a compromise or arrangement with your creditors, which may save your company, its business and jobs while maximising the return to your creditors. It is a way to trade out of your financial difficulties at a time when you are unable to pay your debts. VA should be considered before Liquidation. However, if your company cannot formulate a proposal that is agreed upon by both creditors and directors, VA can be used to easily and inexpensively wind up your company.

When Should You Initiate a Voluntary Administration?

To Avoid Trading While Insolvent

Directors are legally required to take measures to avoid insolvent trading and Voluntary Administration is often used by troubled businesses to combat the severe consequences involved. By initiating VA, you can raise the defence that you took steps to avoid insolvent trading by appointing an Administrator and avoiding incurring further debt.

To Resolve Creditor Issues

Voluntary Administration not only helps companies in strife hit the pause button on creditor demands, it also gives them a chance to bring in an independent expert. It allows you to focus on resolving problems, including creditor issues, instead of constantly reacting to creditor actions. Similarly, creditors will have the chance to review what’s happening in your business with the Administrator’s reports. They will have the ability to vote on a DOCA, liquidation or return to trading under company directors.

To Protect Directors From a Director Penalty Notice

Companies with cash flow and insolvency issues could be falling behind on their ATO-related compliance. In this case, the ATO may pursue directors personally for their unpaid tax debts and superannuation through a director penalty notice.

To Prevent Liquidation

Although Liquidation is a possible outcome of VA, the VA process gives you a chance to assess whether other options could be viable before creditors vote for Liquidation. The goal of VA is to provide the best outcome for creditors, so if entering a DOCA or returning the company back to the directors’ control is more desirable than Liquidation, VA gives you an opportunity to avoid Liquidation.

The 4-Step Voluntary Administration Process

Step 1: Appoint a Voluntary Administrator

The Voluntary Administrator will exercise certain powers of your company and its directors. They will take control of your company’s business and affairs, which means they might continue trading but it will be cautious as the Voluntary Administrator is personally liable for all expenses they incur during the VA process.

Step 2: First Meeting of Creditors

Following the appointment of the Voluntary Administrator, they must issue a report within five businesses days to notify your creditors of their appointment and call the first meeting of creditors.

Step 3: Voluntary Administrator's Investigation and Report

The Voluntary Administrator must investigate your company’s affairs and report to your creditors on the expected outcomes: this could be proposing a Deed of Company Arrangement (DOCA), Liquidation or handing the reigns of the business back to you.

Step 4: Second Meeting of Creditors

In this meeting, the options available to your creditors are discussed and either a DOCA will be initiated shortly after the meeting, or your company will enter Liquidation during the meeting. Commonly, the Voluntary Administrator will become the Liquidator.

Free Financial Advice for Your Business

At Revive Financial, we understand how difficult it can be to watch your company struggle with its finances. That’s why when you get in touch with our Sydney team, we provide a free 30-minute consultation and business health check so we can get to know your company and its current financial situation.

Our dedicated, friendly team has over 43 years of combined experience and will work with you to assess the situation and provide the best recommendation to help you regain your peace of mind. If Voluntary Administration is recommended for your business, you can rest easy knowing professionals are on the job. Our team consists of Chartered Accountants, Registered Liquidators, Bankruptcy Trustees, Turnaround Specialists and Financial Advisors who are ready to help you turn your business around.

Is Voluntary Administration the Right Solution for Your Business?

If your company is struggling financially, there are a number of paths you can take to turn things around. Our experts at Revive Financial will help you decide if Voluntary Administration is the best option for your company. Call us today on 1800 861 247.

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