Focus your energies on what’s important.
If your corporation is facing serious financial challenges, it can feel like there simply aren’t enough hours in the day to address those challenges. By relinquishing control of the corporation’s affairs to an independent expert, you will allow yourself the opportunity to refocus on what is most important, and formulate a plan for the business.
Delay settling your debts by paying off the most pressing ones first.
When your business is already facing financial or operational problems, your creditors are likely to be concerned and may feel the need to increase pressure on you to continue clearing debts. Thankfully, voluntary administration laws state that no new or existing claims can be enforced against your company without the consent of the administrator or a court.
While it is a short-term solution, those few weeks can be the turning point your company needs to get back on its feet. If you can put together an effective plan in a timely fashion, you will be in a much better position to negotiate with your creditors.
Ease the liquidation process
Going into voluntary administration may be the best option for a business that is beyond the point of saving. This way, you may be able to offer a better return to creditors than you could otherwise have managed, had you jumped straight to liquidation.
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What Is Voluntary Administration FAQ’s
What is voluntary administration?
Voluntary administration is a formal insolvency process in which an independent and qualified administrator takes control of a financially troubled company to assess its financial position and to develop a plan to resolve its debts.
Who can initiate voluntary administration?
A company’s directors or creditors can initiate voluntary administration. The directors can initiate voluntary administration if they believe that the company is insolvent or likely to become insolvent. The creditors can initiate voluntary administration if they believe that the company owes them money and is not able to pay its debts as they fall due.
What are the benefits of voluntary administration?
The benefits of voluntary administration include allowing the company to continue trading while the administrator develops a plan to resolve its debts, protecting the company from legal action by creditors, and providing a mechanism for the company to avoid liquidation or bankruptcy. Additionally, voluntary administration can help to maximize the return for creditors and reduce the risks for directors in situations where the company is insolvent.