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If Directors of a company are of the opinion that their company is insolvent or is likely to become insolvent at some future time, then the Directors should resolve to appoint a Voluntary Administrator. Failure to do so may result in the Directors becoming personally liable for insolvent trading.

We are appointed as Voluntary Administrators of many companies in this way.

Secured creditors also have the power to appoint an Administrator.

The need for Voluntary Administration

"The Voluntary Aadministrators can undertake any tasks necessary to maximise the business potential and ultimately the return to stakeholders of the company.

Voluntary administration is designed so that a company maintains the greatest chance possible of continuing to exist. Often a Voluntary Administration is a precursor to the company entering into an arrangement with creditors to pay debts, in the form of a proposed Deed of Company Arrangement. This is a cooperative approach whereby creditors agree to the arrangement rather than enforcing debt claims.

In any scenario the creditors of the company ultimately determine its future. Should creditors fail to accept a proposal for a Deed of Company Arrangement the remaining options are for the administration to end handing the company back to its directors or to place it into liquidation."

The purpose of the Voluntary Administration

A deed of company arrangement (DOCA) creates a binding agreement between a company and its creditors as to how the company must manage its affairs.

A deed of company arrangement is one of the outcomes as a result of a company entering voluntary administration.

The goal of the deed of company arrangement is to provide the company with a manageable debt plan in the best interests of the stakeholders of the company and to avoid the necessity of the company going into liquidation. A deed of company arrangement usually offers a larger return to its creditors in respect of their outstanding debts than could be achieved from liquidating the company. It is common that upon entering a Deed of Company Arrangement that the control of the company reverts to its directors whilst the Deed Administrator administers the Deed and pays dividends to the proved creditors.

Deed of Company Arrangement

It is the responsibility of the deed administrator to ensure that a company adheres to the steps and agreements laid out in a deed of company arrangement. The deed administrator is usually the appointed voluntary administrator, subject to the resolution of the company’s creditors.

SMB Advisory's registered insolvency practitioners have had significant success as a result of their experience in administering companies resulting in successful deed of company arrangements with the company surviving and thriving into the future.

We can provide you with the most appropriate solution for your circumstances.

How we can help

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Voluntary administration provides a crucial lifeline for companies facing financial distress, offering companies the necessary breathing room to pay their debts and ongoing financial obligations so that the company's financial position may be fully assessed.

This process enables the company's creditors to consider a proposal and allow the company to stay out of liquidation.

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