Voluntary Administration Explained
Voluntary administration is a rescue-focused process that tries to save a struggling business or get a better result than immediate liquidation.
What you'll learn
- What voluntary administration is designed to achieve
- The role of the administrator
- What a deed of company arrangement is
- How creditors participate and vote
7 min read
The purpose
Voluntary administration is a process where an independent administrator takes control of a financially distressed company to work out the best outcome for creditors as a whole. The aim is to give the business breathing space — either to be rescued and continue trading, or to deliver a better return to creditors than they would get from winding the company up straight away.
The administrator's role
Once appointed, the administrator investigates the company's affairs, takes over its management, and reports to creditors on the options. During this period there is usually a freeze on most claims and enforcement against the company, which prevents a disorderly scramble and gives the administrator time to assess what can realistically be saved or recovered.
Deeds of company arrangement
One possible outcome is a deed of company arrangement — a binding agreement setting out how creditors will be paid, often a defined sum or a portion of what is owed, in full settlement. Creditors decide whether to accept it. A deed can deliver a quicker, more certain return than liquidation, but it commonly means accepting less than the full debt.
How creditors take part
Creditors are notified, can attend meetings, and vote on the company's future. Your vote and engagement matter, so respond to the administrator's correspondence and lodge your claim. Keep your records ready — see lodging a proof of debt — and read the administrator's report carefully before any vote.
A note on advice
This is general information only, not legal, financial, or tax advice. Voluntary administration is governed by detailed rules and tight timeframes, so seek qualified advice on how to protect your position.
Key takeaways
- Administration aims to rescue the business or beat a straight liquidation.
- Most claims against the company are frozen during the process.
- A deed of company arrangement may settle debts for less than the full amount.
- Engage, lodge your claim, and vote — your participation counts.
Frequently asked questions
Will administration save my customer's business?
Sometimes, but not always. The administrator assesses whether rescue is viable or whether another outcome serves creditors better. General information only.
Should I vote for a deed of company arrangement?
That depends on the return it offers versus the alternatives. Read the administrator's report and seek advice before voting.
Can I keep trading with the company during administration?
Sometimes, often on a cash basis. Treat new supply cautiously and confirm terms with the administrator.
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