Voluntary administration
A structured pause to make the right decision. An independent voluntary administrator takes control, most creditor action stops, and your creditors get an informed choice about the company's future, usually within about a month.
What voluntary administration actually is
Voluntary administration is a formal insolvency process under Part 5.3A of the Corporations Act 2001. An independent, registered voluntary administrator is appointed to take control of the company, investigate its affairs, and give creditors an informed recommendation about the company's future.
The object of the process, set out in s435A, is to administer an insolvent company's affairs so that it either maximises the chance the company or its business continues in existence, or, where that is not possible, delivers a better return to creditors than they would get from an immediate winding up.
It is deliberately short and structured, so a company in financial distress gets a decision quickly rather than dragging on while debts grow.
- How long it runs
- About four to five weeks from appointment to the creditors' decision.
- Who controls the company
- The voluntary administrator. Control passes from the company directors for the duration of the administration.
- What the moratorium does
- A statutory moratorium applies from the moment of appointment.
- How it ends
- Creditors choose one of three outcomes at the watershed meeting: back to directors, a DOCA, or liquidation.
What a voluntary administration protects
The moratorium is the point. It buys room a company in financial difficulty otherwise would not have.
Creditor action stops
When a company enters voluntary administration, a statutory moratorium halts most creditor actions. Unsecured creditors cannot enforce debts, and legal proceedings against the company are largely put on hold.
An independent read
A registered liquidator with no stake in the outcome forms the view creditors rely on.
Weight off the directors
Control passing to the voluntary administrator puts an independent administrator between you and your creditors.
The business may survive
Where creditors approve a deed of company arrangement, the company's business can continue.
How creditors decide the company's future
At the watershed meeting, the company's creditors vote on three outcomes. Anyone implying the business is likely to be handed back is not being honest.
The company is returned to the directors
Rare in practice.
It happens only where the company is shown to be solvent, or the problem has been resolved. It is never the expected result.
A deed of company arrangement
The outcome is worth working for.
Creditors agree to a binding arrangement because it offers a better return than immediate liquidation and may allow the business to continue. Mechanics below.
Liquidation
When the company cannot be saved.
If no arrangement will deliver a better result, creditors will wind up the company and realise its assets. The outcome reflects the business's actual state.
The voluntary administration process, from first creditors' meeting to the watershed vote
A tight statutory clock: appointment to decision in about a month.
- STEP 1
Appoint a voluntary administrator, and the moratorium starts
Directors, a creditor with a security interest over substantially the whole of the company's property, or an existing liquidator or provisional liquidator can appoint. The administrator takes control, and the moratorium applies immediately.
- STEP 2
First meeting of creditors, about 8 business days
Held within roughly eight business days of appointment. Creditors can replace the administrator and form a committee of inspection. It is procedural, not decisive.
- STEP 3
The voluntary administrator's investigation and report
The voluntary administrator examines the company's financial circumstances, including its solvency, books, assets and liabilities, and whether insolvent trading claims or other recoveries exist, then reports to creditors with a recommendation.
- STEP 4
Watershed meeting, about 20 to 25 business days
At the second, or watershed, meeting, generally about 20 to 25 business days after appointment, creditors vote on one of the three outcomes. The court can extend this.
Voluntary administration, liquidation or small business restructuring
These three solve different problems. The wrong one wastes money and time.
| Voluntary administration | Liquidation | Small business restructuring | |
|---|---|---|---|
| Best when | The business may be viable | The company cannot be saved | Viable core, debt under $1m |
| Who initiates | Directors, a secured creditor, or a liquidator | Directors and members, creditors, or the court | Directors |
| Who controls | The voluntary administrator; trading often continues | A liquidator; trading usually stops | Directors, with a restructuring practitioner |
| Typical duration | About 4 to 5 weeks | Months to years | Around 5 weeks to a plan |
| Outcome | Return to directors, DOCA, or liquidation | Company deregistered after wind-up | Restructuring plan, or exit to another process |
Real people, on your side, when it matters most
At Rapsey Griffiths, you'll deal with the people whose name is on the door - Mitch Griffiths and Chad Rapsey, Founders. Mitch and Chad have spent decades on corporate insolvency matters and turnaround work across NSW and nationally. You'll get a direct view of where the company stands and what we'd do about it. If a business can be saved, we'll say so, and if it can't, we'll say that too.
What happens when you get in touch
Three steps, with no obligation at any of them.
A free call with a Registered Liquidator
Tell us what's happening with the company in your own words. We'll ask about the ATO position, secured and unsecured debts, employees, and how much time you have.
We assess solvency and set out the options
We review the company's financial position and explain which corporate insolvency procedures are genuinely available in your context, what each costs, and what each means for you personally.
We take the appointment and run it
If you proceed, we handle the process end to end - creditors, employees, statutory reporting and ASIC obligations - so you can deal with what comes next.
What people ask us first
Straight answers to the questions we hear most. If yours isn't here, just ask on your first call.
What happens to employees when a company goes into voluntary administration?+
It does not cover superannuation or amounts above those caps. FEG generally applies only when the company enters liquidation, not merely because it is in voluntary administration or under a DOCA.
What is a Deed of Company Arrangement (DOCA)?+
In many cases, the money is held in a creditors’ trust, so creditors are paid from the trust while the company is released from the covered debts and can continue trading.
Once a DOCA is in place, the deed administrator administers it, collecting the agreed contributions, dealing with creditor claims under its terms, and distributing funds as the deed provides. If the company fails to comply, creditors can terminate the deed, and the company will usually enter liquidation.
What are the risks of voluntary administration?+
I have received a director penalty notice. Does voluntary administration help?+
Does appointing a voluntary administrator stop a winding-up application?+
Can the business keep trading during a voluntary administration?+
Read up before you reach out
Indicators of a struggling business
The warning signs that a company is heading for insolvency, and why they are worth acting on early.
ATO notices, and what ignoring them costs
Director penalty notices, garnishee notices and statutory demands, and the steps that protect the business.
The latest ASIC data on turnarounds
External administrations are at a record high. What the numbers say about moving early.
Explore how else we can help
Liquidation
An orderly, properly handled wind-down when a company is no longer viable.
What liquidation involves →Small business restructuring
Keep control and keep trading while a plan deals with the debt. Liabilities under $1m.
How the SBR process works →Corporate insolvency
Voluntary administration, liquidation and creditor arrangements for companies under pressure.
Compare all business options →