A company will be set in company when the executives of the company form the opinion that the company is insolvent, on the other hand is liable to wind up indebted. A head, who is a person external to the company, is appointed to manage the company in the meantime. A head must be an enrolled liquidator.
A voluntary administrator can be appointed in various ways:
- By the directors of the company.
- By a liquidator or provisional liquidator.
- By a secured creditor.
During the voluntary administration, an administrator will:
- Take control of the company’s assets.
- Investigate the company’s affairs.
- Report any offences to ASIC.
- Assist the directors to produce a Deed of Company Arrangement.
- Report to creditors on the best course of action which will provide the most lucrative outcome for the creditors.
- Call the requisite gatherings of loan bosses so as to choose whether or not the company should be wound up and placed in liquidation or continue to trade.
During an administration, creditors have 3 options moving forward:
- Accept a proposal for a Deed of Company Arrangement.
- End the voluntary administration and pass control of the company back to the company directors.
- Liquidate the company.