When a company enters voluntary administration, control shifts from directors to an independent administrator. The administrator notifies stakeholders, investigates the company’s financial position, and oversees a short decision period. Creditors then vote on the outcome: restructure through a DOCA, place the company into liquidation, or return control to the directors.
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On This Page
- Introduction
- Voluntary Administration Process Flowchart
- Step 1: Board Assessment & Resolution
- Step 2: Appointment of a Registered Liquidator
- Step 3: Formal Execution of Appointment
- Step 4: Immediate Notifications
- Step 5: First Creditors’ Meeting
- Step 6: Administration Period (Control, Investigation & Moratorium)
- Step 7: Second Creditors’ Meeting
- Step 8: The Three Possible Outcomes
- Exceptions to the VA Process
- Important Points to Remember
- Next Steps
- FAQs
Introduction
Voluntary administration follows a structured legal process under Australian insolvency law. While each situation is different, the steps themselves are consistent and time-bound.
This guide breaks the process down into a clear, flowchart-style sequence, from the initial board decision through to the final outcome.
Voluntary Administration Process Flowchart
Below is how the voluntary administration (VA) process typically unfolds in Australia.
Step 1: Board Assessment & Resolution
The process begins with the company’s directors.
They review the company’s financial position and determine whether it is insolvent or likely to become insolvent. If so, they must pass a formal resolution to appoint a voluntary administrator.
This step is critical. Delays can expose directors to insolvent trading risks.
Step 2: Appointment of a Registered Liquidator
Once the decision is made, the directors engage a registered liquidator to act as the voluntary administrator.
The proposed administrator must:
- Confirm they are independent
- Provide a written Consent to Act
- Disclose any prior relationships with the company
Step 3: Formal Execution of Appointment
The appointment becomes effective the moment the directors sign the required documents.
From this point:
- Control of the company shifts immediately to the administrator
- Directors remain in office, but their powers are suspended
Step 4: Immediate Notifications
After appointment, the administrator must notify key stakeholders.
This includes:
- ASIC
- Creditors
- Employees
A public notice is also issued to inform the market that the company has entered voluntary administration.
Step 5: First Creditors’ Meeting
The administrator must convene the first creditors’ meeting within 8 business days.
At this meeting, creditors can:
- Confirm the administrator’s appointment, or
- Replace them with another registered liquidator
This is typically a short, procedural meeting.
Step 6: Administration Period (Control, Investigation & Moratorium)
During the administration period, the administrator takes full control of the business.
Key features of this stage include:
- Suspension of director powers
The administrator manages operations, cash flow, and key decisions. - Statutory moratorium
Most creditor actions are paused. Unsecured creditors cannot enforce debts, and certain claims against directors are restricted. - Investigation of the company
The administrator reviews financial records, transactions, and potential misconduct, and prepares a report for creditors.
This phase usually runs for approximately 3–4 weeks.
Step 7: Second Creditors’ Meeting
At the end of the administration period, a second meeting is held.
Here, creditors decide the company’s future based on the administrator’s report and recommendations.
Step 8: The Three Possible Outcomes
At this final stage, creditors vote on one of three outcomes:
1. Deed of Company Arrangement (DOCA)
A DOCA is a binding agreement between the company and its creditors.
It typically allows the business to:
- Continue trading
- Repay debts (in full or in part) over time
2. Liquidation
If recovery is not viable, the company moves into liquidation.
This involves:
- Selling company assets
- Distributing funds to creditors
- Winding up the business
3. Return to Directors
If the company is found to be viable, control may be handed back to the directors.
The company then exits voluntary administration and resumes normal operations.
Exceptions to the VA Process
While most voluntary administrations follow the director-led process above, there are exceptions.
For example:
- A secured creditor may appoint an administrator in certain circumstances
- A court can order the appointment of an administrator
These pathways follow different triggers but generally lead into the same administration process once appointed.
Important Points to Remember
Control shifts immediately
Once the administrator is appointed, directors no longer control the company’s operations or decisions.
Directors remain but lose authority
Directors stay in their roles legally, but their powers are suspended during the administration period.
Creditor actions are paused
A statutory moratorium prevents most unsecured creditors from taking enforcement action while the company is in administration.
The process is time-sensitive
Voluntary administration typically runs over a short period, with strict deadlines for meetings and reporting.
Liquidation is not the only outcome
Companies may restructure through a DOCA or return to directors if viable — liquidation is only one of several possible outcomes.
Next Steps
Voluntary administration is a formal legal process with strict requirements and timelines. Early action is key.
As a director, your initial steps should be:
- Documenting your financial position clearly, including debts, assets, and creditor details
- Preparing board resolutions and internal records to support the appointment
- Identifying and contacting a suitable registered liquidator early, as availability can impact timing
- Avoiding further financial commitments that could worsen the company’s position
For advice specific to your situation, it’s important to speak with an insolvency professional or legal advisor as soon as possible.
At Halo Advisory, we work for you — the director. Financial expert Greg Bartels offers a no-obligation, confidential conversation to help you understand where you stand, what risks exist, and what options are realistically available before deadlines reduce control. Get in touch today.
FAQs
How long does voluntary administration take in Australia?
Most voluntary administrations run for around 3 to 4 weeks, ending with the second creditors’ meeting.
Do directors lose control during voluntary administration?
Yes. Control passes immediately to the administrator, and directors’ powers are suspended.
Can creditors stop legal action during VA?
In most cases, yes. A statutory moratorium prevents unsecured creditors from taking enforcement action during the administration period.
Does voluntary administration always lead to liquidation?
No. Companies may enter a DOCA or be returned to directors if viable.
