A procedure that the director or directors of a company can enter into when they know that their company is insolvent, but believe it can trade out of its insolvency. “In this case a person independent of the company, and registered to be an administrator, will be appointed by the directors,” says Jeremy. “Their purpose is to determine if the company can trade out of its insolvent position, or whether it’s best to liquidate.”
If you truly believe recovery is possible, even if things might have to get worse before they get better. “Directors of a company use a voluntary administrator so they’re not accused of insolvent trading,” says Jeremy. Under the Corporations Act in Australia, if a company is insolvent and a director allows the company to incur new debt, they can personally be held liable.
Don’t be over-confident. “In my experience, most business owners believe they can trade out of an insolvent position,” says Jeremy. In fact, crunching numerous research sources it looks like voluntary administration only saves around two per cent of insolvent businesses.
Topshop Australia. Earlier this year, almost six years after opening its first store in Melbourne, the Australian franchise of the British high street brand announced that restructuring firm Ferrier Hodgson had been appointed to consider its “optimal operating structure”. With nine standalone stores and 17 Myer concessions, all parts of the business are currently being reviewed.