Voluntary administration

Voluntary administration

Save your business with voluntary administration

The primary purpose of voluntary administrations is to give insolvent companies a legal process so they can continue in existence. It’s an alternative to the liquidation of the company.

Signs that your company have a solvency problem include:

  • Where you are spending more time “fire fighting” than running the business
  • Cashflow problems
  • Problems paying the Inland Revenue
  • Problems paying employees
  • Overdue debtors
  • Regularly negotiating deferrals and special repayment arrangements with creditors
  • Formal demands for payment from creditors
  • Liabilities exceed assets

Buy time with voluntary administration

The first reaction to business trouble is often to ignore it. Avoiding calls from your creditors or injecting your own money into a failing business is not the best long-term solution. There are a number of restructuring options, such as voluntary administration that may enable the business to survive and avoid liquidation. The directors of a company can appoint an independent administrator who will suggest a recovery plan for creditors to consider.

Why voluntary administration?

Choosing voluntary administration provides the following benefits:

  • It provides a business with breathing room to restructure and survive
  • It can prevent creditors from taking action, such as Court proceedings, enforcing securities and taking possession of property, or making demands under a personal guarantee
  • It may provide a better return for creditors and owners than they would receive from an immediate liquidation
  • It can protect directors from personal liability for continued trade

How long does voluntary administration last in New Zealand?

A voluntary administration usually goes for 30-40 days.

What are your responsibilities as a company director?

If your company trades while insolvent, as a director you can be held personally responsible for the business's liabilities. Taking a proactive approach, such as voluntary administration or liquidation, lowers the likelihood of legal action being brought against you for a breach of your duties as a director.

A creditor compromise often allows a company to cover short term debt with long term debt, providing a cash flow improvement. It requires creditor approval and our specialist team can guide you through this process.


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