Voluntary administration – until recently the core statutory restructuring mechanism available for Australia businesses – is expensive. Generally speaking, a cheap voluntary administration costs between $30-50,000, all for a process that should be completed within two months.
A recent Victorian Supreme Court case, Intellicomms, shows the dangers of poor pre-insolvency advice and entering into a pre-pack without carrying out sensible due diligence. Here we explain the implications of this case for directors, the appropriate valuation approach to avoid liquidator claims for creditor-defeating dispositions, and what all this means for pre-packs in general.
Voluntary administrations have been in decline in Australia for 25 years. Here we examine why this might be, paying particular attention to the incidence of Deeds of Company Arrangement (DOCAs). Our conclusion is that a confluence of poor public reputation, expense and legislative change has led to the relative unpopularity of voluntary administration as a corporate restructuring methodology
The primary way in which creditors can influence a voluntary administration is through participation in either the first or second creditors’ meeting — meetings chaired by the voluntary administrator. Through this process creditors can replace voluntary administrators, have a say on remuneration and costs, approve of a debt compromise and more.
Voluntary liquidation (CVL) and voluntary administration (VA) have a range of pros and cons, relative to each other. Here we look at the advantages of voluntary administration, including the ability to turn around the business, director initiation and the breathing space it provides to directors.
Once the DOCA is being administered, there is no longer a moratorium on ‘ipso facto’ clauses. In short, this allows suppliers, landlords and other creditors with suitable contracts to immediately terminate those contracts on appointment of the deed administrator.