Voluntary Administration

We act as Administrators and Deed Administrators. Our goal is to maximise the chances of the company, or its business, continuing in existence or if that is not possible, for the company or its business, to be administered with a better return to creditors and shareholders than from immediate liquidation.

The ultimate benefit of voluntary administration is to provide a company with an opportunity to restructure its debt and ultimately trade out of difficulty.

Voluntary administration was introduced in New Zealand on 1 November 2007. It is governed by Part 15A of the Companies Act 1993. A voluntary administrator may be appointed to a company by the directors of the company, a liquidator of the company, a secured creditor holding a security over the whole or substantially the whole of the company's property, or the Court.

Objectives Of Voluntary Administration

The objectives of voluntary administration are to maximise the chance of a company or its business continuing in existence or, for the company or its business to be administered with a better return to creditors and shareholders, than from immediate liquidation.

This is achieved by either:

  • Putting in place a deed of company arrangement (DOCA) that allows ongoing trading (with or without a view to sell); or
  • Restructuring by way of a wind down DOCA; or
  • Selling all or part of the company's business before the watershed meeting.
    Administration and the administrators' role ends at the watershed meeting.

Administrators will become either deed administrators or be appointed liquidators, or the directors resume control of the company.

Benefits of Voluntary Administration

The key benefits of voluntary administration are:

  • Independent, qualified, professional administrators who take control of the company;
  • Administration may protect directors from future personal liability, including liability for reckless trading;
  • Administrators work with the company and creditors to make decisions as to the future viability of the company.

In What Situations Should You Use Voluntary Administration

Voluntary administration is used most commonly where:

  • A secured creditor wishes to preserve value in the company;
  • There is a pre-agreed restructuring plan. Secured creditors retain their rights;
  • The company may wish to appoint so that a director can avoid future allegations of reckless trading; or
  • Directors are seeking to avoid liquidation and/or creditors are taking enforcement action against the company during the moratorium (although secured creditors who are entitled to appoint receivers can still do so within ten working days of notification of administration).

Voluntary administration is especially beneficial to businesses in the retail sector because it prevents retention of title creditors and landlords from taking possession of secured collateral or leased premises, or re-entering leased premises (although it does not give the administrators a license to deal with the property).