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Voluntary Administration

What is Voluntary Administration?

Voluntary Administration is the process available to companies that wish to make a formal payment arrangement with creditors in order to keep the business going. The offer to creditors should be greater than what would otherwise be available to creditors in liquidation.


Related links

Corporations Act 2001

Section 1483


Insolvency: a glossary of terms (INFO 41)

Voluntary administration: a guide for creditors (INFO 74)




Frequently Asked Questions About Voluntary Administration



What is a Deed of Company Arrangement (DOCA)?

A Deed of Company Arrangement (or DOCA) is a formal agreement between the company and its creditors, along with any other relevant third parties, to satisfy company debts.  The DOCA will set out in its terms and conditions, warranties and indemnities, the extent or nature of obligations, and relationships between those persons who are a party to it.  The Deed binds both secured (to the extent of any shortfalls on their secured debt) and unsecured creditors, and releases the company from its debts – only to the extent provided for within the terms and conditions of the DOCA.


It is not uncommon for director/s to submit the draft deed to the Administrator in summary form with a more acceptable and complete Deed to be tabled at the second meeting of creditors.


What are the Director’s Responsibilities?

When an Administrator is appointed to a company the director is obliged to:


* Complete a Report as to Affairs (RATA) and supply this to the Administrator so they have an understanding of the company's position

* Collate all books and records and hand these over to the Administrator – as requested

* Be available to respond to any question and/or queries of the Administrator – as and when required

* Be available to attend all creditors meetings

* Control of the company vests with the Administrator during this period


When will the creditors be notified?

The first meeting of creditors is to be held no more than 8 business days after the administration begins. The second creditors meeting is held within 25 business days of the Administrators appointment. At this meeting this creditors will vote on what the future of the company will be.



What are the effects of a voluntary administration?

While the company is in voluntary administration:

1. Unsecured creditors can’t begin, continue or enforce their claims against the company without the administrator’s consent or the court’s permission

2. Landlords, or people who lease such property to the company, can’t recover their property

3. Except in limited circumstances, secured creditors can’t enforce their charge over company property

4. A court application to put the company in liquidation can’t be commenced, and

5. A creditor holding a personal guarantee from the company’s director or other person can’t act under the personal guarantee without the court’s consent



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