Directors should confirm insolvency, assess their financial position, seek early advice, and decide whether voluntary administration is appropriate. Once appointed, they must cooperate with the administrator, provide records, and prepare for outcomes such as restructuring or liquidation. Acting early and maintaining clarity at each step is critical.
On This Page
- Introduction
- Step 1: Confirm the Company Is Insolvent (or Close)
- Step 2: Get Clarity
- Step 3: Seek Advice Before Control Is Lost
- Step 4: Decide Whether to Enter Voluntary Administration
- Step 5: Appoint a Voluntary Administrator
- Step 6: Provide Information and Support the Administrator
- Step 7: Understand What Happens During the Process
- Step 8: Prepare for Possible Outcomes
- Step 9: Manage Your Position as a Director
- Step 10: Plan the Next Phase
- Common Mistakes
- Final Word
- FAQs
Introduction
Voluntary administration is a structured legal process — but for directors, the critical issue is not the process itself. It is understanding what actions need to be taken, and when.
In situations of financial pressure, timing and decision-making are often more important than the process that follows.
This guide breaks down the practical steps directors should take before, during, and after voluntary administration.
If you’re looking for an overview of the entire voluntary administration process, head over to Voluntary Administration: A Guide for Directors.
Step 1: Confirm the Company Is Insolvent (or Close)
Before considering voluntary administration, clarify whether the company can pay its debts as they fall due.
This isn’t about long-term profitability — it’s about short-term reality.
Common indicators include:
- Persistent cash flow gaps
- Unpaid ATO liabilities or superannuation
- Supplier pressure or overdue accounts
- Difficulty securing further funding
If these issues are present, voluntary administration may be relevant — but it is not the only option.
For more on this distinction, see: Should My Business Consider Voluntary Administration?
Step 2: Get Clarity
Before taking formal action, it’s critical to understand where the business actually stands.
This means having a clear view of:
- Total liabilities
- Immediate creditor pressure
- Available cash or assets
- Upcoming obligations
This doesn’t require a full audit — but it does require enough clarity to avoid making decisions based on assumptions.
Entering voluntary administration without this understanding can lead to poor outcomes.
Step 3: Seek Advice Before Control Is Lost
Once voluntary administration begins, control of the company shifts to the administrator.
Seeking professional advice early can help you determine risks, whether alternatives are still available, and whether voluntary administration is even appropriate at this stage.
In some cases, options like restructuring or Safe Harbour may be a better solution than to enter into VA.
For more on this distinction, see: Should My Business Consider Voluntary Administration?
Our team of voluntary administration experts can also guide you in this space. Book a confidential, no-obligation call with Greg Bartels to discuss your situation.
Step 4: Decide Whether to Enter Voluntary Administration
This is the key decision point.
Voluntary administration is preferable when:
- The business cannot meet its obligations
- Creditor pressure is escalating
- Informal solutions are no longer effective
The decision should be based on whether you need:
- Protection from creditor action
- Time to assess options
- A structured process to move forward
Entering too early or too late can both affect the outcome.
Step 5: Appoint a Voluntary Administrator
If you decide to proceed, the next step is appointing a voluntary administrator.
This is a formal legal action, usually taken by directors.
Once appointed:
- The administrator takes control of the company
- Directors no longer make operational decisions
- The formal process begins immediately
For more detail, see: Voluntary Administrator Explained: What They Do, Who Appoints Them, & What Happens Next
Step 6: Provide Information and Support the Administrator
Once voluntary administration begins, directors are legally required to assist the administrator.
Under Part 5.3A, section 438B of the Corporations Act 2001 (Cth), directors must:
- Provide all company books and records
- Attend meetings when required
- Answer questions about the company’s affairs
Failure to cooperate can delay the process, affect outcomes, and create additional legal consequences.
Step 7: Understand What Happens During the Process
At this stage, the administrator takes over responsibility for assessing the business.
This includes:
- Reviewing financial records
- Investigating the company’s position
- Engaging with creditors
Two creditor meetings are held, and a decision is made on the company’s future.
Step 8: Prepare for Possible Outcomes
Voluntary administration leads to a decision — not an indefinite process.
Directors should be prepared for one of three outcomes:
- A Deed of Company Arrangement (DOCA)
- Liquidation (winding up)
- Return of control to directors
Each outcome carries different implications for the business and for you personally.
Step 9: Manage Your Position as a Director
Even during voluntary administration, directors retain responsibilities.
This includes:
- Cooperating fully with the administrator
- Complying with legal obligations
- Ensuring accurate disclosure of information
The administrator may also review past conduct, including decisions made prior to insolvency.
Maintaining transparency and cooperation is essential.
Step 10: Plan the Next Phase
Voluntary administration is not the end — it is a transition point.
Depending on the outcome, the next phase may involve:
- Continuing under a restructuring arrangement
- Winding down the business
- Regaining control and resuming operations
Directors should begin thinking about this early, rather than waiting for the final decision.
More on this: What Happens to Directors of a Company in Administration
Common Mistakes
Waiting too long to act
Directors should assess their position early and act before creditor pressure escalates and options become limited.
Entering voluntary administration without exploring alternatives
Before proceeding, consider whether restructuring, informal arrangements, or Safe Harbour protections may still be available.
Failing to prepare accurate financial records
Ensure all books and records are complete and up to date, as this directly affects the administrator’s assessment and the outcome.
Assuming voluntary administration guarantees survival
Treat voluntary administration as an assessment process — not a rescue — and prepare for all possible outcomes.
Not seeking advice before control is lost
Obtain professional advice early, while you still have control, to understand risks, timing, and available options.
Final Word
Voluntary administration is not just a process — it is a sequence of decisions made under pressure.
Each step decides what happens next. During the process, directors need to act with clarity at each stage — particularly before control shifts and options narrow.
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
What is the first step before entering voluntary administration?
The first step is confirming whether your company is insolvent or likely to become insolvent. This means assessing whether you can pay debts as they fall due. Without this clarity, it is difficult to determine whether voluntary administration is appropriate or whether other options remain available.
Is voluntary administration mandatory?
No — voluntary administration is not mandatory. Directors or creditors choose to appoint an administrator when financial pressure reaches a point where protection, time, and structure are needed. In some cases, secured creditors may also initiate the process.
Read more: Should My Business Consider Voluntary Administration?
What should directors do before entering voluntary administration?
Before entering voluntary administration, directors should:
- Understand their financial position
- Assess creditor pressure
- Review available alternatives
- Seek professional advice
Taking these steps helps ensure the decision is informed, rather than reactive.
What documents are required for voluntary administration?
Directors must provide all company books and records to the administrator. This typically includes financial statements, tax records, creditor lists, contracts, and bank statements.
Under section 438B of the Corporations Act 2001 (Cth), directors are legally required to assist by providing this information and answering questions about the company’s affairs.
Can a director reverse voluntary administration once it starts?
In most cases, no. Once a voluntary administrator is appointed, control shifts away from the directors and the process follows a legal framework. The company’s future is then decided by creditors, not directors.
What happens after voluntary administration?
At the end of the process, creditors decide the company’s future. This may involve restructuring through a DOCA, liquidation, or returning control to directors.
How long does voluntary administration typically take?
Voluntary administration is a relatively fast process, usually completed within 25 to 30 business days. This includes the appointment, review period, and two creditor meetings, although extensions may be granted in more complex cases. Further reading: How Long Does Voluntary Administration Last
