Voluntary Administration (DOCA)

A Voluntary Administration is a type of formal insolvency appointment that is designed to resolve a company’s future quickly and to give the company its best chance to restructure its affairs and continue to trade in some form.

During the Voluntary Administration period, unsecured creditors are restrained from enforcing their claims against the company which then gives the company breathing space whilst the company’s future is decided.

A Voluntary Administration is most commonly used when a company is suffering from one-off financial problems or short term cash flow issues.

The purpose of a Voluntary Administration is to administer the affairs of the company in a way that results in creditors getting a better return than they would have received had the company been put into liquidation.

The most commonly used mechanism to help creditors get a better return than through liquidation is by implementing a Deed Of Company Arrangement ( DOCA ) which is a formal agreement between the company and its creditors to satisfy company debts.

The Voluntary Administration period runs for 20 business days but during the Christmas and Easter period is extended to 25 business days.

Once this period ends creditors then vote to either approve a DOCA through which the company will pay all or parts of its debts and then be free of those debts, end the Voluntary Administration and return the company to the Directors’ control or Wind Up the company and appoint a Liquidator.

For further information on Voluntary Administration please contact the Team at Vanguard Insolvency Australia for Free Confidential Advice.