A voluntary administrator is an independent, qualified outsider who is called in to take control of an insolvent company when it enters voluntary administration.
The aim of the voluntary administrator is to manage the company’s property and affairs during the voluntary administration process with a view to carry on the company’s business.
Once a company is placed into voluntary administration, the voluntary administrator takes control from the directors and has full power over the company.
The voluntary administrator’s first task is to gain an understanding of the company’s assets, liabilities and business prospects.
The voluntary administrator must then organise the first creditors meeting within eight days of their appointment. At that meeting, creditors can vote to replace the voluntary administrator.
Assuming the voluntary administrator is retained, they will then conduct a more thorough review of the company. The voluntary administrator will share their findings at the second creditors meeting, which must be held within 25 business days of their appointment.
The voluntary administrator will recommend that creditors do one of three things:
- Place the directors back in control; or
- Implement a deed of company arrangement; or
- Put the company into liquidation.
If the directors are placed back in control, the voluntary administration ends and the voluntary administrator returns control to the directors.
If a deed of company arrangement is implemented, the voluntary administration ends and the company resumes trading – although under strict conditions (as laid out in the deed of company arrangement) and under the oversight of the deed administrator (who is usually the same person as the voluntary administrator).
If the company is put into liquidation, the voluntary administration ends and the creditors appoint a liquidator (who may be the same person as the voluntary administrator). The liquidator will then try to wind up the company in such a way as to deliver the maximum return to creditors.
At the end of the voluntary administration process, the voluntary administrator will lodge a report with ASIC. This report will contain a ledger of the company’s receipts and payments (known as the end of administration return). The voluntary administrator will also notify ASIC of any offences that might have been committed by any of the company’s directors or staff.