The administrator acts as an agent of the company. The directors’ powers are suspended, but in practice, if the company continues to trade, the directors will often be retained to manage the day to day operations of the company and are accountable to the administrators.
The administrators must call a meeting of creditors to be held within 8 business days of appointment. At that meeting, creditors are allowed to replace the administrator and appoint a committee of creditors, who act to assist the administrator in the performance of his or her duties.
The administrator must call a second meeting of creditors to be held within 25 business days of appointment. This period is often extended by application to the Court in large or complex administrations.
Prior to the second meeting of creditors, the Administrator must investigate the affairs of the company and report the results of his/her investigations to the creditors and Australian Securities and Investment Commission (“ASIC”).
During this period the administrator will also liaise with the directors to formulate a proposal, where possible, for the company to enter into a Deed of Company Arrangement (“DOCA”). The purpose of the proposal is to put to the creditors a plan to save the company and maximise the return to creditors, thereby preventing the winding up of the company.
Once a proposal has been formulated, the administrator will prepare a report to creditors, detailing his/her investigations and recommendation on whether he/she thinks the creditors should accept or reject the proposal. Creditors will then be asked to decide whether to accept the proposal at the second meeting.
The options available to creditors at the second meeting are:
Our voluntary administration team can help you to comply with the laws surrounding administration, allowing you to avoid incurring penalties.
Our voluntary administration consultants are ready to provide you with assistance; simply pick up the phone and get in touch with us today.