Navigating the challenges of financial distress can be overwhelming for companies facing insolvency.
With the weight of financial pressures, many directors and shareholders struggle to find a pathway that secures the business’s best interests.
Voluntary administration can offer a strategic alternative to liquidation, providing a company in financial difficulty with breathing space to restructure and, ideally, recover.
However, without experienced guidance, the complex legal process of voluntary administration can be daunting, and missteps may lead to immediate liquidation or the forfeiture of valuable assets.
In Auckland, our insolvency law firm specialises in voluntary administration, supporting businesses in navigating these intricate procedures to avoid liquidation and secure better financial outcomes.
With our team of licensed insolvency practitioners, we assess each client’s unique financial circumstances to develop a tailored recovery plan that aligns with their business’s best interests to get them back on track.
Our team provides comprehensive services throughout the voluntary administration process, enabling companies to make informed decisions about their future. Below are some of the key services we offer to assist businesses in Auckland in maintaining control and exploring options to avoid liquidation.
When a company faces insolvency, appointing a voluntary administrator can be a lifeline. Our team helps you understand the implications of appointing an administrator, guiding you through the decision-making process to ensure it aligns with your goals. With an expert voluntary administrator appointed, your company gains the time to assess its options without the immediate threat of liquidation.
Our services include preparing for and conducting the first creditors’ meeting, where creditors receive information about the company’s financial affairs and future plans. We ensure that secured creditors are properly represented, and that their rights and interests are safeguarded throughout the administration.
A Deed of Company Arrangement (DOCA) provides a structured agreement between the company and its creditors. We work closely with directors and creditors to formulate a DOCA that maximises financial benefit for all parties, enabling the business to continue trading while meeting its obligations. A well-structured DOCA can be a crucial step in avoiding immediate liquidation.
During the voluntary administration process, a moratorium period temporarily halts legal actions against the company, giving it time to restructure. Our firm manages this critical period to ensure your business can continue trading and maintain its cash flow, laying the groundwork for potential recovery.
The watershed meeting is a pivotal moment in the voluntary administration process, where creditors vote on the company’s future. We support the preparation and facilitation of this meeting, presenting clear options and the company’s best interests to the creditors, ensuring that the final outcome is in line with the business’s long-term goals.
Not all financially distressed companies will benefit from voluntary administration; for some, liquidation may offer a better return for creditors. Our team advises on when voluntary administration is appropriate and when liquidation might be the optimal route, ensuring decisions are made in the company’s best interests.
To make informed choices, it is essential for company directors and shareholders to understand the steps and components of the voluntary administration process. This section provides insight into the legal process, from appointing an administrator to negotiating with creditors and managing the company’s property and assets.
When a company is insolvent, an administrator is appointed to evaluate the business’s affairs and determine its viability. This initial appointment marks the beginning of the voluntary administration process, during which the company’s financial circumstances are closely examined.
Upon the administrator’s appointment, the company is granted a moratorium period, protecting it from legal actions that could otherwise lead to immediate liquidation. This period allows the company time to consider all options and propose a potential deed of company arrangement to creditors.
Two primary meetings occur during voluntary administration: the first creditors’ meeting and the watershed meeting. In these meetings, creditors are given updates on the company’s financial state and vote on the company’s future, determining whether it should pursue a recovery plan or proceed to liquidation.
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Voluntary administration is a legal process that allows financially distressed companies to appoint an administrator to take control temporarily. The administrator assesses the company’s affairs and proposes options to creditors, such as a Deed of Company Arrangement, which may help avoid liquidation.
While voluntary administration aims to explore options for a company to continue trading or restructure, liquidation involves winding up the company’s operations and distributing its assets to creditors. Voluntary administration offers a chance for potential recovery, while liquidation signifies closure.
A DOCA is a binding agreement between the company and its creditors, outlining how the business will meet its obligations. The DOCA can allow a company to continue trading, providing creditors with a structured repayment plan that may be more financially beneficial than immediate liquidation.
Yes, under the management of the appointed administrator, a company may continue trading during the moratorium period, provided it maintains cash flow and meets specific obligations. This allows time for the administrator to assess the company’s financial position.
If creditors vote against the proposed recovery plan, the company typically moves into liquidation. The liquidator will then proceed with winding up the company and distributing its assets to satisfy outstanding debts.
The length of voluntary administration varies depending on the company’s circumstances, but it is generally completed within a few months. Key meetings, such as the watershed meeting, occur within specified timeframes to ensure a timely resolution.
Voluntary administration can offer significant advantages, allowing directors and shareholders to retain some control over the business and work towards recovery. However, each company’s situation is unique, and an assessment by licensed insolvency practitioners is essential.
The company’s directors usually appoint the administrator. However, a secured creditor with a charge over most of the company’s assets may also appoint an administrator if the company is unable to meet its financial obligations.
Secured creditors have priority in the administration process, and their interests are considered when decisions are made regarding the company’s assets and property. Secured creditors often play a key role in voting on the recovery plan.
Yes, voluntary administration typically halts court proceedings against the company during the moratorium period, providing an opportunity to negotiate with creditors without the immediate threat of legal action.
In times of financial stress, voluntary administration offers companies in Auckland a structured pathway to avoid liquidation and explore recovery.
Our insolvency law firm is committed to helping your business navigate these complex processes with expert support, empowering you to make decisions that serve the company’s best interests.
Reach out to our team today to discuss how voluntary administration could provide your business with the financial relief and strategic guidance it needs to move forward confidently.
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