Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
One of the most misunderstood aspects of voluntary administration is its interaction with director liability for insolvent trading. Under section 588G of the Corporations Act, directors can be personally liable for debts incurred by the company while insolvent. However, there are specific defences available to directors:
- During administration, the administrator — not the directors — incurs debts on behalf of the company. Those debts are the administrator’s personal liability (covered by indemnity from company assets), not the directors’ liability.
- Appointing an administrator when a company is insolvent demonstrates that directors have taken action — relevant to the “safe harbour” defence under section 588GA and to demonstrating good faith.
- The moratorium prevents creditors from taking enforcement action against the company during the process.
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
At the second creditors meeting, creditors vote on one of three outcomes:
| Outcome | What it means | When it applies |
|---|---|---|
| 1. Execute a DOCA | Company enters into a Deed of Company Arrangement — a binding arrangement with creditors to pay a specified amount over time | A proponent (usually the directors or a third party) has made a viable offer that provides a better return than liquidation |
| 2. Return to directors | Company is returned to the directors’ control | Administrator concludes the company is solvent or can trade its way through; rarely occurs in practice |
| 3. Liquidation | Company proceeds to creditors’ voluntary liquidation | No viable DOCA is proposed, or creditors vote for liquidation |
Director Protections During Voluntary Administration
One of the most misunderstood aspects of voluntary administration is its interaction with director liability for insolvent trading. Under section 588G of the Corporations Act, directors can be personally liable for debts incurred by the company while insolvent. However, there are specific defences available to directors:
- During administration, the administrator — not the directors — incurs debts on behalf of the company. Those debts are the administrator’s personal liability (covered by indemnity from company assets), not the directors’ liability.
- Appointing an administrator when a company is insolvent demonstrates that directors have taken action — relevant to the “safe harbour” defence under section 588GA and to demonstrating good faith.
- The moratorium prevents creditors from taking enforcement action against the company during the process.
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
This moratorium gives the administrator breathing room to investigate the company’s affairs without creditors racing to recover assets. However, it is not absolute — secured creditors who hold a General Security Agreement over all (or substantially all) of the company’s assets have a 13 business day window from appointment to enforce their security before the moratorium binds them.
The Three Outcomes of Voluntary Administration
At the second creditors meeting, creditors vote on one of three outcomes:
| Outcome | What it means | When it applies |
|---|---|---|
| 1. Execute a DOCA | Company enters into a Deed of Company Arrangement — a binding arrangement with creditors to pay a specified amount over time | A proponent (usually the directors or a third party) has made a viable offer that provides a better return than liquidation |
| 2. Return to directors | Company is returned to the directors’ control | Administrator concludes the company is solvent or can trade its way through; rarely occurs in practice |
| 3. Liquidation | Company proceeds to creditors’ voluntary liquidation | No viable DOCA is proposed, or creditors vote for liquidation |
Director Protections During Voluntary Administration
One of the most misunderstood aspects of voluntary administration is its interaction with director liability for insolvent trading. Under section 588G of the Corporations Act, directors can be personally liable for debts incurred by the company while insolvent. However, there are specific defences available to directors:
- During administration, the administrator — not the directors — incurs debts on behalf of the company. Those debts are the administrator’s personal liability (covered by indemnity from company assets), not the directors’ liability.
- Appointing an administrator when a company is insolvent demonstrates that directors have taken action — relevant to the “safe harbour” defence under section 588GA and to demonstrating good faith.
- The moratorium prevents creditors from taking enforcement action against the company during the process.
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
One of the most important features of voluntary administration is the automatic moratorium (stay) on most creditor enforcement action. From the date of appointment, creditors generally cannot:
- Commence or continue litigation against the company
- Enforce a judgment against the company
- Enforce a security interest (with limited exceptions)
- Take possession of company property
- Exercise rights of re-entry or forfeiture under a lease
This moratorium gives the administrator breathing room to investigate the company’s affairs without creditors racing to recover assets. However, it is not absolute — secured creditors who hold a General Security Agreement over all (or substantially all) of the company’s assets have a 13 business day window from appointment to enforce their security before the moratorium binds them.
The Three Outcomes of Voluntary Administration
At the second creditors meeting, creditors vote on one of three outcomes:
| Outcome | What it means | When it applies |
|---|---|---|
| 1. Execute a DOCA | Company enters into a Deed of Company Arrangement — a binding arrangement with creditors to pay a specified amount over time | A proponent (usually the directors or a third party) has made a viable offer that provides a better return than liquidation |
| 2. Return to directors | Company is returned to the directors’ control | Administrator concludes the company is solvent or can trade its way through; rarely occurs in practice |
| 3. Liquidation | Company proceeds to creditors’ voluntary liquidation | No viable DOCA is proposed, or creditors vote for liquidation |
Director Protections During Voluntary Administration
One of the most misunderstood aspects of voluntary administration is its interaction with director liability for insolvent trading. Under section 588G of the Corporations Act, directors can be personally liable for debts incurred by the company while insolvent. However, there are specific defences available to directors:
- During administration, the administrator — not the directors — incurs debts on behalf of the company. Those debts are the administrator’s personal liability (covered by indemnity from company assets), not the directors’ liability.
- Appointing an administrator when a company is insolvent demonstrates that directors have taken action — relevant to the “safe harbour” defence under section 588GA and to demonstrating good faith.
- The moratorium prevents creditors from taking enforcement action against the company during the process.
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
Under section 436A of the Corporations Act, a company’s board of directors may resolve to appoint a voluntary administrator if the directors believe — on reasonable grounds — that the company is insolvent or likely to become insolvent. This is the most common pathway.
A secured creditor who holds a security interest over the whole (or substantially the whole) of the company’s property may also appoint an administrator under section 436C, provided certain conditions are met. A liquidator or provisional liquidator may also appoint an administrator in limited circumstances.
The Voluntary Administration Process — Step by Step
- Board resolution to appoint administrator — directors sign a written resolution; administrator accepts appointment
- Administrator takes control — assumes the powers of the board; directors’ authority is suspended
- Notification — ASIC notified; creditors and employees notified within 8 business days
- First creditors meeting — held within 8 business days; creditors may replace the administrator
- Investigation period — administrator examines books and records, assesses assets and liabilities, negotiates with potential DOCA proponents
- Administrator’s report — circulated to creditors before the second meeting; includes three options and the administrator’s recommendation
- Second creditors meeting (DOCA meeting) — creditors vote on the company’s future
- Outcome implemented — DOCA executed, company returned to directors, or liquidator appointed
The Moratorium — Protection from Creditor Action
One of the most important features of voluntary administration is the automatic moratorium (stay) on most creditor enforcement action. From the date of appointment, creditors generally cannot:
- Commence or continue litigation against the company
- Enforce a judgment against the company
- Enforce a security interest (with limited exceptions)
- Take possession of company property
- Exercise rights of re-entry or forfeiture under a lease
This moratorium gives the administrator breathing room to investigate the company’s affairs without creditors racing to recover assets. However, it is not absolute — secured creditors who hold a General Security Agreement over all (or substantially all) of the company’s assets have a 13 business day window from appointment to enforce their security before the moratorium binds them.
The Three Outcomes of Voluntary Administration
At the second creditors meeting, creditors vote on one of three outcomes:
| Outcome | What it means | When it applies |
|---|---|---|
| 1. Execute a DOCA | Company enters into a Deed of Company Arrangement — a binding arrangement with creditors to pay a specified amount over time | A proponent (usually the directors or a third party) has made a viable offer that provides a better return than liquidation |
| 2. Return to directors | Company is returned to the directors’ control | Administrator concludes the company is solvent or can trade its way through; rarely occurs in practice |
| 3. Liquidation | Company proceeds to creditors’ voluntary liquidation | No viable DOCA is proposed, or creditors vote for liquidation |
Director Protections During Voluntary Administration
One of the most misunderstood aspects of voluntary administration is its interaction with director liability for insolvent trading. Under section 588G of the Corporations Act, directors can be personally liable for debts incurred by the company while insolvent. However, there are specific defences available to directors:
- During administration, the administrator — not the directors — incurs debts on behalf of the company. Those debts are the administrator’s personal liability (covered by indemnity from company assets), not the directors’ liability.
- Appointing an administrator when a company is insolvent demonstrates that directors have taken action — relevant to the “safe harbour” defence under section 588GA and to demonstrating good faith.
- The moratorium prevents creditors from taking enforcement action against the company during the process.
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
Under section 436A of the Corporations Act, a company’s board of directors may resolve to appoint a voluntary administrator if the directors believe — on reasonable grounds — that the company is insolvent or likely to become insolvent. This is the most common pathway.
A secured creditor who holds a security interest over the whole (or substantially the whole) of the company’s property may also appoint an administrator under section 436C, provided certain conditions are met. A liquidator or provisional liquidator may also appoint an administrator in limited circumstances.
The Voluntary Administration Process — Step by Step
- Board resolution to appoint administrator — directors sign a written resolution; administrator accepts appointment
- Administrator takes control — assumes the powers of the board; directors’ authority is suspended
- Notification — ASIC notified; creditors and employees notified within 8 business days
- First creditors meeting — held within 8 business days; creditors may replace the administrator
- Investigation period — administrator examines books and records, assesses assets and liabilities, negotiates with potential DOCA proponents
- Administrator’s report — circulated to creditors before the second meeting; includes three options and the administrator’s recommendation
- Second creditors meeting (DOCA meeting) — creditors vote on the company’s future
- Outcome implemented — DOCA executed, company returned to directors, or liquidator appointed
The Moratorium — Protection from Creditor Action
One of the most important features of voluntary administration is the automatic moratorium (stay) on most creditor enforcement action. From the date of appointment, creditors generally cannot:
- Commence or continue litigation against the company
- Enforce a judgment against the company
- Enforce a security interest (with limited exceptions)
- Take possession of company property
- Exercise rights of re-entry or forfeiture under a lease
This moratorium gives the administrator breathing room to investigate the company’s affairs without creditors racing to recover assets. However, it is not absolute — secured creditors who hold a General Security Agreement over all (or substantially all) of the company’s assets have a 13 business day window from appointment to enforce their security before the moratorium binds them.
The Three Outcomes of Voluntary Administration
At the second creditors meeting, creditors vote on one of three outcomes:
| Outcome | What it means | When it applies |
|---|---|---|
| 1. Execute a DOCA | Company enters into a Deed of Company Arrangement — a binding arrangement with creditors to pay a specified amount over time | A proponent (usually the directors or a third party) has made a viable offer that provides a better return than liquidation |
| 2. Return to directors | Company is returned to the directors’ control | Administrator concludes the company is solvent or can trade its way through; rarely occurs in practice |
| 3. Liquidation | Company proceeds to creditors’ voluntary liquidation | No viable DOCA is proposed, or creditors vote for liquidation |
Director Protections During Voluntary Administration
One of the most misunderstood aspects of voluntary administration is its interaction with director liability for insolvent trading. Under section 588G of the Corporations Act, directors can be personally liable for debts incurred by the company while insolvent. However, there are specific defences available to directors:
- During administration, the administrator — not the directors — incurs debts on behalf of the company. Those debts are the administrator’s personal liability (covered by indemnity from company assets), not the directors’ liability.
- Appointing an administrator when a company is insolvent demonstrates that directors have taken action — relevant to the “safe harbour” defence under section 588GA and to demonstrating good faith.
- The moratorium prevents creditors from taking enforcement action against the company during the process.
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
Voluntary administration suspends the normal operations of a company and hands control to an independent, registered administrator. Unlike liquidation — which ends the company — voluntary administration is explicitly designed to assess whether the company, or its business, can be saved. It may be initiated by the directors, a secured creditor, or a liquidator under specific circumstances.
The administrator’s role is to investigate the company’s financial affairs, assess its options, and report to creditors with a recommendation. Creditors then vote on the company’s future at the second creditors meeting — one of the most significant meetings in commercial insolvency practice.
Who Can Appoint an Administrator?
Under section 436A of the Corporations Act, a company’s board of directors may resolve to appoint a voluntary administrator if the directors believe — on reasonable grounds — that the company is insolvent or likely to become insolvent. This is the most common pathway.
A secured creditor who holds a security interest over the whole (or substantially the whole) of the company’s property may also appoint an administrator under section 436C, provided certain conditions are met. A liquidator or provisional liquidator may also appoint an administrator in limited circumstances.
The Voluntary Administration Process — Step by Step
- Board resolution to appoint administrator — directors sign a written resolution; administrator accepts appointment
- Administrator takes control — assumes the powers of the board; directors’ authority is suspended
- Notification — ASIC notified; creditors and employees notified within 8 business days
- First creditors meeting — held within 8 business days; creditors may replace the administrator
- Investigation period — administrator examines books and records, assesses assets and liabilities, negotiates with potential DOCA proponents
- Administrator’s report — circulated to creditors before the second meeting; includes three options and the administrator’s recommendation
- Second creditors meeting (DOCA meeting) — creditors vote on the company’s future
- Outcome implemented — DOCA executed, company returned to directors, or liquidator appointed
The Moratorium — Protection from Creditor Action
One of the most important features of voluntary administration is the automatic moratorium (stay) on most creditor enforcement action. From the date of appointment, creditors generally cannot:
- Commence or continue litigation against the company
- Enforce a judgment against the company
- Enforce a security interest (with limited exceptions)
- Take possession of company property
- Exercise rights of re-entry or forfeiture under a lease
This moratorium gives the administrator breathing room to investigate the company’s affairs without creditors racing to recover assets. However, it is not absolute — secured creditors who hold a General Security Agreement over all (or substantially all) of the company’s assets have a 13 business day window from appointment to enforce their security before the moratorium binds them.
The Three Outcomes of Voluntary Administration
At the second creditors meeting, creditors vote on one of three outcomes:
| Outcome | What it means | When it applies |
|---|---|---|
| 1. Execute a DOCA | Company enters into a Deed of Company Arrangement — a binding arrangement with creditors to pay a specified amount over time | A proponent (usually the directors or a third party) has made a viable offer that provides a better return than liquidation |
| 2. Return to directors | Company is returned to the directors’ control | Administrator concludes the company is solvent or can trade its way through; rarely occurs in practice |
| 3. Liquidation | Company proceeds to creditors’ voluntary liquidation | No viable DOCA is proposed, or creditors vote for liquidation |
Director Protections During Voluntary Administration
One of the most misunderstood aspects of voluntary administration is its interaction with director liability for insolvent trading. Under section 588G of the Corporations Act, directors can be personally liable for debts incurred by the company while insolvent. However, there are specific defences available to directors:
- During administration, the administrator — not the directors — incurs debts on behalf of the company. Those debts are the administrator’s personal liability (covered by indemnity from company assets), not the directors’ liability.
- Appointing an administrator when a company is insolvent demonstrates that directors have taken action — relevant to the “safe harbour” defence under section 588GA and to demonstrating good faith.
- The moratorium prevents creditors from taking enforcement action against the company during the process.
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
Voluntary administration suspends the normal operations of a company and hands control to an independent, registered administrator. Unlike liquidation — which ends the company — voluntary administration is explicitly designed to assess whether the company, or its business, can be saved. It may be initiated by the directors, a secured creditor, or a liquidator under specific circumstances.
The administrator’s role is to investigate the company’s financial affairs, assess its options, and report to creditors with a recommendation. Creditors then vote on the company’s future at the second creditors meeting — one of the most significant meetings in commercial insolvency practice.
Who Can Appoint an Administrator?
Under section 436A of the Corporations Act, a company’s board of directors may resolve to appoint a voluntary administrator if the directors believe — on reasonable grounds — that the company is insolvent or likely to become insolvent. This is the most common pathway.
A secured creditor who holds a security interest over the whole (or substantially the whole) of the company’s property may also appoint an administrator under section 436C, provided certain conditions are met. A liquidator or provisional liquidator may also appoint an administrator in limited circumstances.
The Voluntary Administration Process — Step by Step
- Board resolution to appoint administrator — directors sign a written resolution; administrator accepts appointment
- Administrator takes control — assumes the powers of the board; directors’ authority is suspended
- Notification — ASIC notified; creditors and employees notified within 8 business days
- First creditors meeting — held within 8 business days; creditors may replace the administrator
- Investigation period — administrator examines books and records, assesses assets and liabilities, negotiates with potential DOCA proponents
- Administrator’s report — circulated to creditors before the second meeting; includes three options and the administrator’s recommendation
- Second creditors meeting (DOCA meeting) — creditors vote on the company’s future
- Outcome implemented — DOCA executed, company returned to directors, or liquidator appointed
The Moratorium — Protection from Creditor Action
One of the most important features of voluntary administration is the automatic moratorium (stay) on most creditor enforcement action. From the date of appointment, creditors generally cannot:
- Commence or continue litigation against the company
- Enforce a judgment against the company
- Enforce a security interest (with limited exceptions)
- Take possession of company property
- Exercise rights of re-entry or forfeiture under a lease
This moratorium gives the administrator breathing room to investigate the company’s affairs without creditors racing to recover assets. However, it is not absolute — secured creditors who hold a General Security Agreement over all (or substantially all) of the company’s assets have a 13 business day window from appointment to enforce their security before the moratorium binds them.
The Three Outcomes of Voluntary Administration
At the second creditors meeting, creditors vote on one of three outcomes:
| Outcome | What it means | When it applies |
|---|---|---|
| 1. Execute a DOCA | Company enters into a Deed of Company Arrangement — a binding arrangement with creditors to pay a specified amount over time | A proponent (usually the directors or a third party) has made a viable offer that provides a better return than liquidation |
| 2. Return to directors | Company is returned to the directors’ control | Administrator concludes the company is solvent or can trade its way through; rarely occurs in practice |
| 3. Liquidation | Company proceeds to creditors’ voluntary liquidation | No viable DOCA is proposed, or creditors vote for liquidation |
Director Protections During Voluntary Administration
One of the most misunderstood aspects of voluntary administration is its interaction with director liability for insolvent trading. Under section 588G of the Corporations Act, directors can be personally liable for debts incurred by the company while insolvent. However, there are specific defences available to directors:
- During administration, the administrator — not the directors — incurs debts on behalf of the company. Those debts are the administrator’s personal liability (covered by indemnity from company assets), not the directors’ liability.
- Appointing an administrator when a company is insolvent demonstrates that directors have taken action — relevant to the “safe harbour” defence under section 588GA and to demonstrating good faith.
- The moratorium prevents creditors from taking enforcement action against the company during the process.
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
Voluntary administration is a formal insolvency process designed to give a financially troubled company a chance to survive — or at least achieve a better outcome for creditors than immediate liquidation. Under Part 5.3A of the Corporations Act 2001 (Cth), an external administrator (the “administrator”) is appointed to take control of the company, investigate its affairs, and report to creditors on the best way forward. The process is designed to be fast — it typically concludes within about 25 business days of appointment.
What is Voluntary Administration?
Voluntary administration suspends the normal operations of a company and hands control to an independent, registered administrator. Unlike liquidation — which ends the company — voluntary administration is explicitly designed to assess whether the company, or its business, can be saved. It may be initiated by the directors, a secured creditor, or a liquidator under specific circumstances.
The administrator’s role is to investigate the company’s financial affairs, assess its options, and report to creditors with a recommendation. Creditors then vote on the company’s future at the second creditors meeting — one of the most significant meetings in commercial insolvency practice.
Who Can Appoint an Administrator?
Under section 436A of the Corporations Act, a company’s board of directors may resolve to appoint a voluntary administrator if the directors believe — on reasonable grounds — that the company is insolvent or likely to become insolvent. This is the most common pathway.
A secured creditor who holds a security interest over the whole (or substantially the whole) of the company’s property may also appoint an administrator under section 436C, provided certain conditions are met. A liquidator or provisional liquidator may also appoint an administrator in limited circumstances.
The Voluntary Administration Process — Step by Step
- Board resolution to appoint administrator — directors sign a written resolution; administrator accepts appointment
- Administrator takes control — assumes the powers of the board; directors’ authority is suspended
- Notification — ASIC notified; creditors and employees notified within 8 business days
- First creditors meeting — held within 8 business days; creditors may replace the administrator
- Investigation period — administrator examines books and records, assesses assets and liabilities, negotiates with potential DOCA proponents
- Administrator’s report — circulated to creditors before the second meeting; includes three options and the administrator’s recommendation
- Second creditors meeting (DOCA meeting) — creditors vote on the company’s future
- Outcome implemented — DOCA executed, company returned to directors, or liquidator appointed
The Moratorium — Protection from Creditor Action
One of the most important features of voluntary administration is the automatic moratorium (stay) on most creditor enforcement action. From the date of appointment, creditors generally cannot:
- Commence or continue litigation against the company
- Enforce a judgment against the company
- Enforce a security interest (with limited exceptions)
- Take possession of company property
- Exercise rights of re-entry or forfeiture under a lease
This moratorium gives the administrator breathing room to investigate the company’s affairs without creditors racing to recover assets. However, it is not absolute — secured creditors who hold a General Security Agreement over all (or substantially all) of the company’s assets have a 13 business day window from appointment to enforce their security before the moratorium binds them.
The Three Outcomes of Voluntary Administration
At the second creditors meeting, creditors vote on one of three outcomes:
| Outcome | What it means | When it applies |
|---|---|---|
| 1. Execute a DOCA | Company enters into a Deed of Company Arrangement — a binding arrangement with creditors to pay a specified amount over time | A proponent (usually the directors or a third party) has made a viable offer that provides a better return than liquidation |
| 2. Return to directors | Company is returned to the directors’ control | Administrator concludes the company is solvent or can trade its way through; rarely occurs in practice |
| 3. Liquidation | Company proceeds to creditors’ voluntary liquidation | No viable DOCA is proposed, or creditors vote for liquidation |
Director Protections During Voluntary Administration
One of the most misunderstood aspects of voluntary administration is its interaction with director liability for insolvent trading. Under section 588G of the Corporations Act, directors can be personally liable for debts incurred by the company while insolvent. However, there are specific defences available to directors:
- During administration, the administrator — not the directors — incurs debts on behalf of the company. Those debts are the administrator’s personal liability (covered by indemnity from company assets), not the directors’ liability.
- Appointing an administrator when a company is insolvent demonstrates that directors have taken action — relevant to the “safe harbour” defence under section 588GA and to demonstrating good faith.
- The moratorium prevents creditors from taking enforcement action against the company during the process.
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
- Voluntary administration (VA) is an insolvency regime under Part 5.3A of the Corporations Act 2001 (Cth)
- Directors appoint an administrator to take control of the company and investigate its financial position
- The process typically runs for 20–25 business days (first meeting + second meeting)
- Three possible outcomes: execute a Deed of Company Arrangement (DOCA), return company to directors, or proceed to liquidation
- The administration period provides a moratorium — most creditor action is stayed while the administrator works
Voluntary Administration Explained — What Directors and Creditors Need to Know
Voluntary administration is a formal insolvency process designed to give a financially troubled company a chance to survive — or at least achieve a better outcome for creditors than immediate liquidation. Under Part 5.3A of the Corporations Act 2001 (Cth), an external administrator (the “administrator”) is appointed to take control of the company, investigate its affairs, and report to creditors on the best way forward. The process is designed to be fast — it typically concludes within about 25 business days of appointment.
What is Voluntary Administration?
Voluntary administration suspends the normal operations of a company and hands control to an independent, registered administrator. Unlike liquidation — which ends the company — voluntary administration is explicitly designed to assess whether the company, or its business, can be saved. It may be initiated by the directors, a secured creditor, or a liquidator under specific circumstances.
The administrator’s role is to investigate the company’s financial affairs, assess its options, and report to creditors with a recommendation. Creditors then vote on the company’s future at the second creditors meeting — one of the most significant meetings in commercial insolvency practice.
Who Can Appoint an Administrator?
Under section 436A of the Corporations Act, a company’s board of directors may resolve to appoint a voluntary administrator if the directors believe — on reasonable grounds — that the company is insolvent or likely to become insolvent. This is the most common pathway.
A secured creditor who holds a security interest over the whole (or substantially the whole) of the company’s property may also appoint an administrator under section 436C, provided certain conditions are met. A liquidator or provisional liquidator may also appoint an administrator in limited circumstances.
The Voluntary Administration Process — Step by Step
- Board resolution to appoint administrator — directors sign a written resolution; administrator accepts appointment
- Administrator takes control — assumes the powers of the board; directors’ authority is suspended
- Notification — ASIC notified; creditors and employees notified within 8 business days
- First creditors meeting — held within 8 business days; creditors may replace the administrator
- Investigation period — administrator examines books and records, assesses assets and liabilities, negotiates with potential DOCA proponents
- Administrator’s report — circulated to creditors before the second meeting; includes three options and the administrator’s recommendation
- Second creditors meeting (DOCA meeting) — creditors vote on the company’s future
- Outcome implemented — DOCA executed, company returned to directors, or liquidator appointed
The Moratorium — Protection from Creditor Action
One of the most important features of voluntary administration is the automatic moratorium (stay) on most creditor enforcement action. From the date of appointment, creditors generally cannot:
- Commence or continue litigation against the company
- Enforce a judgment against the company
- Enforce a security interest (with limited exceptions)
- Take possession of company property
- Exercise rights of re-entry or forfeiture under a lease
This moratorium gives the administrator breathing room to investigate the company’s affairs without creditors racing to recover assets. However, it is not absolute — secured creditors who hold a General Security Agreement over all (or substantially all) of the company’s assets have a 13 business day window from appointment to enforce their security before the moratorium binds them.
The Three Outcomes of Voluntary Administration
At the second creditors meeting, creditors vote on one of three outcomes:
| Outcome | What it means | When it applies |
|---|---|---|
| 1. Execute a DOCA | Company enters into a Deed of Company Arrangement — a binding arrangement with creditors to pay a specified amount over time | A proponent (usually the directors or a third party) has made a viable offer that provides a better return than liquidation |
| 2. Return to directors | Company is returned to the directors’ control | Administrator concludes the company is solvent or can trade its way through; rarely occurs in practice |
| 3. Liquidation | Company proceeds to creditors’ voluntary liquidation | No viable DOCA is proposed, or creditors vote for liquidation |
Director Protections During Voluntary Administration
One of the most misunderstood aspects of voluntary administration is its interaction with director liability for insolvent trading. Under section 588G of the Corporations Act, directors can be personally liable for debts incurred by the company while insolvent. However, there are specific defences available to directors:
- During administration, the administrator — not the directors — incurs debts on behalf of the company. Those debts are the administrator’s personal liability (covered by indemnity from company assets), not the directors’ liability.
- Appointing an administrator when a company is insolvent demonstrates that directors have taken action — relevant to the “safe harbour” defence under section 588GA and to demonstrating good faith.
- The moratorium prevents creditors from taking enforcement action against the company during the process.
It is important to note that voluntary administration does not extinguish pre-appointment insolvent trading claims. A liquidator (if the company ultimately goes into liquidation) can still pursue directors for debts incurred before administration began.
What Does Voluntary Administration Cost?
Administrator remuneration is typically charged at hourly rates approved by creditors. In simple cases, administration costs may be $30,000–$60,000; in complex matters, costs can exceed $200,000 or more. Administrator fees rank ahead of all other unsecured creditors in the payment waterfall, which is why creditors scrutinise administrator remuneration reports carefully at creditor meetings.
Directors considering voluntary administration should also budget for their own legal costs — getting independent legal advice before and during the process is essential.
Frequently Asked Questions
Can I still run my business during voluntary administration?
The administrator takes control of the company and can elect to continue trading the business if it is in the best interests of creditors. Directors lose their authority to act on behalf of the company during the administration period. However, directors may still be employed (as employees) to assist the administrator in running the business.
How long does voluntary administration take?
The statutory timeframe is tight. The first creditors meeting must be held within 8 business days of appointment. The second meeting (the DOCA meeting) must be held within 20 business days (or 25 business days in certain circumstances). The Court can extend this timeframe if warranted by the complexity of the administration. In practice, many administrations conclude within 4–8 weeks of appointment.
What is the difference between voluntary administration and liquidation?
Voluntary administration is designed to assess whether a company can be rescued or restructured. Liquidation is designed to wind the company up and distribute its assets to creditors. Voluntary administration may lead to liquidation if no viable DOCA is proposed — but it gives the company a chance to avoid that outcome. Liquidation is permanent; there is no coming back from it.
Can creditors challenge a DOCA?
Yes. Creditors who oppose a DOCA can apply to the Court under section 445D of the Corporations Act to have it set aside. Grounds include: the DOCA was entered into fraudulently, creditors were not provided with adequate information, or the DOCA is unfairly prejudicial to a creditor. Legal advice is essential before challenging a DOCA.
How Boss Lawyers Can Help
Voluntary administration is one of the most time-critical processes in Australian insolvency law. Directors have days, not weeks, to make decisions that will affect their personal liability, the future of their business, and the returns available to creditors. Getting the right legal advice at the point of appointing an administrator — or before — can make a material difference to the outcome.
Mark Harley, Principal Solicitor at Boss Lawyers, has over 17 years’ experience advising in complex commercial and insolvency matters. We regularly act for directors navigating voluntary administration, for creditors seeking to understand their rights and maximise their position, and for parties who need to respond quickly to an administration appointment. We understand the statutory timelines and the practical realities of the process.
For related guidance, see our pages on Deed of Company Arrangement (DOCA) and Insolvency Lawyers Brisbane.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances.
Contact Boss Lawyers today: 1300 267 711 | Get in Touch
Mark Harley | Principal Solicitor | Boss Lawyers Pty Ltd | Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000