If your business is failing, you may be able to save it by choosing to bring in an independent administrator — this is called voluntary administration.
Choosing voluntary administration
While your company can be forced into administration, your board of directors can also voluntarily choose to appoint an administrator. Seek professional legal and financial advice before taking this step.
In deciding whether voluntary administration is an option for your company, you need to find out:
- whether it has the support of your creditors, and
- whether your creditors are likely to gain more financial benefit from your company avoiding liquidation and continuing to trade.
Other considerations include the:
- extent, nature and spread of your company's debts
- attitude of key suppliers
- history of your company's dealings with creditors
- availability of cash flow.
If you choose to enter into voluntary administration, an independent administrator is appointed to review and rearrange your business and financial affairs.
If your company can't be saved, the administrator's focus is to provide creditors and shareholders with a better financial return than might have been achieved were your company put straight into liquidation.
Appointing an administrator
An administrator is usually an insolvency specialist, who:
- takes control of, and investigates, the business and financial affairs of your company
- reports their findings to creditors at creditors' meetings, and
- puts forward recommendations about the future of your company for creditors to vote on at a final watershed meeting.
Once the administrator has filed notice of their appointment, your company's status on the Companies Register is changed from Registered to In voluntary administration.
Your responsibilities as a director
As a director of a company in voluntary administration, you remain in office but your powers are limited.
You must assist the administrator by providing information that includes, but isn't limited to:
- your company's accounts, records and any other information required, and
- a statement of your company's business affairs and financial circumstances for presentation at the first creditors' meeting.
You're also required to attend a watershed meeting where your creditors vote on the future of your company.
At least 2 creditors' meetings are held during voluntary administration.
The administrator must call and advertise:
- a first creditors' meeting to discuss matters arising from the administration and to consider the appointment of a committee of creditors
- other creditors' meetings as required
- a watershed meeting at which creditors vote to decide the future of your company.
Ending voluntary administration
What happens after the watershed meeting depends on whether your company is returned to you, placed in liquidation, or enters into a deed of company arrangement. Your creditors vote on these options, considering the recommendations of the administrator.
If your company goes into liquidation, your status on the Companies Register is changed from Registered to In liquidation.
If a deed of company arrangement is executed, your company's status on the register is changed from In voluntary administration to Registered. This occurs when the deed is filed with the Companies Office.
Filing annual returns
While your company is in voluntary administration you don't need to file an annual return. Once administration ends — if your company continues to trade and remains on the Companies Register — you must file your next and future annual returns as they become due.