Voluntary Administration occurs when a company finds itself unable to fulfill its financial obligations, being insolvent or likely to become insolvent at some future time. This method serves as a proactive mechanism, aiding a company to evaluate their circumstances and develop a path forward, both for its business and its creditors.
Insolvency may arise from a myriad of factors, ranging from unforeseen circumstances to managerial missteps. Timely intervention is critical when dealing with insolvency.
Through the appointment of a Voluntary Administrator, a company can gain breathing space, benefiting from the expertise, impartial guidance and experience of the Administrator in managing companies facing financial challenges. The Administrator will conduct a review and assess the company's financial position, and help formulate a tailored plan for the company's circumstances and future.
Typically, the company’s Directors initiate voluntary administration if the company is experiencing financial difficulties and they expect the company may be insolvent or become insolvent some time in the future. This proactive approach provides the company the opportunity to explore diverse avenues for restructuring, which can include the continuation of its business and its operations.
Voluntary Administration presents a proactive approach to tackling financial challenges, rather than allowing the business to deteriorate further. Appointing an Administrator early on invariably provides more time and options, helping enhance the company's chances of survival and optimising its ability to navigate financial adversity.
