Voluntary Administration & Deeds of Company Arrangement

Administration under Part 5.3A of the Corporations Act 2001 is a procedure governed by law that is available to companies which will lead to one of three outcomes:

  1. A Deed of Company Arrangement;
  2. The winding up of the Company; or
  3. The termination of the administration and the return of the Company to its directors and shareholders.

An administration enables some “breathing space” for a Company that may be in financial difficulty and enable it to obtain the advice and assistance of specialist advisers to determine whether it is possible to make changes to the Company’s operations to effect a turnaround of the Company, or alternatively, whether there is a process that may provide a greater return to creditors than a liquidation.  The administration period is a mandatory one and is ended by one of the three alternatives being adopted by creditors.

There is a stay of actions and civil proceedings against the Company when an administrator is appointed.  There is also a moratorium on action by secured creditors, and owners/lessors of property used by the Company.  The administrator will investigate the Company and advise creditors as to their opinion regarding options for the Company, including any proposals that may be put for a Deed of Company Arrangement.

A Deed of Company Arrangement is an agreement between the Company and its creditors to deal with the operations of the Company is a way that will provide a return to creditors that is more advantageous than liquidation.  The Deed provides a flexible framework for proposals to be put forward, usually by the directors or shareholders and proposals may include the realisation of assets, the creation of a fund to pay creditors or the orderly sale or merger of the Company with some other entity.  Any proposal for a Deed of Company Arrangement is put before creditors and voted upon at a meeting convened under the Corporations Act.

In order to ensure fairness and probity, Deeds of Company Arrangement are supervised by the Courts and may be overturned or amended if their provisions are not in the best interests of creditors.

If a Deed of Company Arrangement is not proposed, the other likely course is for the Company to go into liquidation following the decision meeting and the liquidator may be the administrator or another liquidator.

The termination of the administration and return of the Company to its directors and shareholders, although permissible under the Corporations Act, is very rare.

Access has acted for and against many liquidators and is very experienced in using the processes of administration, including Deeds of Company Arrangement for and against administrators and for the benefit of Companies, their creditors, directors and members.

Voluntary Administration & Deeds of Company Arrangement — Our Team

Director - Accredited Specialist Commercial Litigation - Insolvency