Voluntary Administration

PURPOSE

The main purpose of a Voluntary Administration is to provide a company with a viable alternative to winding up where there is scope for restructuring its financial affairs. Sometimes however a Voluntary Administrator may also be considered where there are other concerns such as the maximisation of the asset values of a company in circumstances where any unreasonable delay will result in a significant reduction which is likely to impact on a return to creditors.

BENEFITS
  • One main advantage of the Voluntary Administration appointment is the expediency with which it can be implemented. The directors are able to effect the appointment of a Voluntary Administrator immediately upon resolving that the company is insolvent or likely to become insolvent.
  • This method of appointment affords the directors the opportunity to consider making a proposal to creditors dealing with the restructuring plan for the company and an arrangement as to how it plans to repay or compromise its debts.
  • There is a moratorium on any outstanding debts, except for secured creditors. These measures provide directors with ‘breathing space’ to focus on the most effective means of resolving the company’s financial problems.
  • Provides an opportunity for the business to continue trading in the future and allows for a greater return to creditors than would otherwise be possible. 
  • Where it may not be viable for the business to continue trading then this form of administration can also enable the assets to be realised in a manner which maximises realisations for creditors.
Jones Partners have a vast amount of experience with appointments of this type and can assist in providing commercial and practical solutions.