Boston Commercial Services Pty Ltd (ABN 87 114 658 070) CAPI Licence Number 409 456 759

You are here: Home / News / Informal and Formal Options For Insolvent Entities Part 2

Informal and Formal Options For Insolvent Entities Part 2

Voluntary Administration

Voluntary Administration is an informal insolvency procedure often initiated by a collection agency to recover debts from a client. The process is designed to achieve a quick solution regarding the payment of receivables; furthermore, it allows for a short moratorium and provides the debtor with time to decide about the business future without the involvement of the courts. Usually appointed by the creditor’s director, Voluntary Administration means the engagement of an external accountant to monitor and report back on any financial performance of the creditors business. When it comes to settling the agreement, time limits apply like in any legal procedure, and since the first meeting is commonly held by the administrator within eight business days, the proposal is often made within less than 35 days.

 

The advantages of a Voluntary Administration are as follows:

  • An independent insolvency practitioner is appointed who controls the company’s assets and reports to creditors on the financial performance of the company and its prospects for the future
  • Administrator has the advantage of seven days rent free period in respect of property owned by others
  • Directors have the opportunity to put forward a proposal to ensure the business and the company continues in existence
  • The appointment of an Administrator avoids personal liability in respect of unpaid tax liabilities
  • The process is relatively short; a standard administration lasts approximately five weeks
  • It is a creditor-driven process, and they have the power to decide the future of the company
  • Any dividends payable occur faster than if the company was placed into Liquidation
  • Creditors and other stakeholders benefit from the company continuing in existence
  • In the event a proposal is accepted by creditors, voidable transaction and preferences are not pursued
  • Creditors are unable to pursue personal guarantees during the administration process

 

The disadvantages of a Voluntary Administration are as follows:

  • It is a creditor-driven process, and they may reject the proposal being put forward and place the company into Liquidation
  • The appointment is advertised
  • The director’s conduct and personal financial positions are reported to creditors
  • During the administration, directors are no longer in control of the company’s business, property and affairs

 

Our next blog in this series will discuss the formal options of Liquidation and Receiverships and their advantages as well as disadvantages.

 

If you would like to learn more about the debt collection services we offer, contact us now. We have over 30 years of experience providing professional and discreet debt collection solutions for clients of all sizes and across all industries. With debt collection agencies in Sydney, Melbourne and Brisbane we have your business covered.

 

Read More:

Informal and Formal Options For Insolvent Entities Part 1

INFORMAL AND FORMAL OPTIONS FOR INSOLVENT ENTITIES PART 3

Get In Touch

Get an obligation free assessment now


Categories

Get in touch with us

Talk to our experts in Debt Recovery, Legal Services and Finance Solutions

admin 4:27 am
  • I have known the principal of the BOSTON Group (Derryn HARRISON) as well as key staff members (including Ben GOWER) for well over 2 decades and have been using their professional services for myself as well as for Powerhouse Logistics Pty. Ltd. on a regular basis, not only in Sydney but on a national basis.

    At all times BOSTON have been extremely pro-active, attentive, courteous and professional with all matters we threw at them. Their advice has always been extremely sound and commercial and I find them to be a "breath of fresh air" within the legal fraternity and have no hesitation whatsoever to highly recommend them.

    Peter Brueckner

    Powerhouse Logistics Pty Ltd (CEO)

  • Expect A Star has worked with The Boston Group for 10 years. In this time we have appreciated the ongoing support of Boston for all of our collection and legal requirements. Like most businesses cashflow is critical to ongoing success and growth, with Boston we have found a partner who are an extension of our business and play a key part in our cashflow management. The Boston Group bring a level of expertise to our business which is valuable and coupled with their excellent customer service we look forward to continuing to work with them for many years to come.

    Ryan Meldrum

    Former CEO

  • I have been using the services of The Boston Group and their legal entity for over 11 years. During this time I have found their service to be impeccable, delivered with the utmost professionalism and integrity. The vast majority of cases that I have placed with Boston were far from straightforward, requiring legal acumen and delicate handling. Having used all methods available without success to procure payment, I confidently placed these matters into their safe hands. In all instances a successful outcome was achieved.

    Mark Parish

    Credit Manager

  • SNP Security has had the pleasure of working with Boston Commercial Services for the past 11 years. Boston has played an integral part in the continuing success of SNP Security’s low DSO’s, 90 Day % Debt & of course Bad Debts Written Off.

    Amanda Griffiths

    National Administration Manager

Boston Commercial Services prides itself in offering specialised, professional services, through a highly experienced team of debt collector, with personalised client attention.