The effect of the appointment of a voluntary administrator is to provide the company with ‘breathing space’ while the company’s future is resolved. While the company is in voluntary administration:
unsecured creditors can’t begin, continue or enforce their claims against the company without the administrator’s consent or the court’s permission
owners of property (other than perishable property) used or occupied by the company, or people who lease such property to the company, can’t recover their property
except in limited circumstances, secured creditors can’t enforce their charge over company property
a court application to put the company in liquidation can’t be commenced, and
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.
mce-anchorContinuing to supply during voluntary administration
Any debts that arise from the voluntary administrator purchasing goods or services, or hiring, leasing, using or occupying property, are paid from the available assets as costs of the voluntary administration. If there are insufficient funds available from asset realisations to pay these costs, the voluntary administrator is personally liable for the shortfall. To have the benefit of this protection, you should ensure you receive a purchase order authorised in the manner advised by the voluntary administrator.
The voluntary administrator must also decide whether to continue to use or occupy property owned by another party that is held or occupied by the company at the time of their appointment.
Within five business days after their appointment, the voluntary administrator must notify the owner of property whether they intend to continue to occupy or use the property. If the voluntary administrator decides to continue to do so, they will be personally liable for any rent or amounts payable arising after the end of the five business days.
Amounts that become due to employees after the date of the appointment of the voluntary administrator have a priority claim against the company’s assets as a cost of the administration. However, the voluntary administrator does not become personally liable for such amounts unless the voluntary administrator adopts employees’ contracts of employment or enters into new employment contracts with them. mce-anchorMeetings of creditors during voluntary administration
Two meetings of creditors must be held during the voluntary administration: First creditors’ meeting
The voluntary administrator must call the first creditors’ meeting within eight business days after the voluntary administration begins.
The purpose of the first meeting is for creditors to decide two questions:
whether they want to form a committee of creditors, and, if so, who will be on the committee, and
whether they want the existing voluntary administrator to be removed and replaced by a voluntary administrator of their choice.
A creditor who wishes to nominate an alternative voluntary administrator must approach a registered liquidator before the meeting and get a written consent from that person that they would be prepared to act as voluntary administrator. The voluntary administrator will only be replaced if the resolution to replace them is passed by the creditors at the meeting.
To be eligible to vote at this meeting, you must lodge details of your debt or claim with the voluntary administrator. Second creditors’ meeting (to decide the company’s future)
After investigating the affairs of the company and forming an opinion on each of the three options available to creditors, including an opinion as to which option is in the best interests of creditors, the administrator must call a second creditors’ meeting. At this meeting, creditors are given the opportunity to decide the company’s future.
This meeting is usually held about five weeks after the company goes into voluntary administration (six weeks at Christmas and Easter).
In preparation for the second meeting, the voluntary administrator must send creditors the following documents at least five business days before the meeting:
a notice of meeting
the voluntary administrator’s report, and
a statement about any proposals for a deed of company arrangement.
These will be accompanied by:
a claim form (usually a ‘proof of debt’ form), and
a proxy voting form.
VPR Price at posting:
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