Small Business Restructuring › Voluntary Administration
Voluntary Administration Lawyers — Moratorium. Assessment. A Path Forward.
Voluntary administration under Part 5.3A of the Corporations Act 2001 provides an immediate moratorium on creditor action while an independent administrator assesses whether the company can be saved (via a DOCA) or should be wound up. It stops the ATO, trade creditors, and secured lenders in their tracks — giving the business time to assess the options. A lawyer advises on whether VA is appropriate and manages the appointment.
⚠ Voluntary administration stops most creditor action immediately — including ATO statutory demands, wind-up applications, and secured creditor enforcement. Directors who wait until a wind-up application is granted have fewer options. Get urgent advice now.
Voluntary Administration Matters We Handle
From the decision to appoint through to the creditors' meeting — and beyond.
Decision to Appoint — Is VA Right?
Voluntary administration is a significant step — once an administrator is appointed, directors lose management control. A lawyer assesses whether VA is the most appropriate option for the company's specific situation, or whether SBR, safe harbour, or an informal restructuring is more appropriate. This assessment must be done quickly — delay increases insolvent trading liability.
Administrator Appointment
The directors appoint a voluntary administrator by passing a resolution and executing a consent to appointment. The administrator must be a registered liquidator. A lawyer manages the appointment process, ensures the procedural requirements are met, and advises on the immediate practical consequences of the appointment — including the moratorium, employee entitlements, and key contracts.
First Creditors' Meeting
The administrator must convene a first meeting of creditors within 8 business days of appointment. Creditors can vote to replace the administrator at this meeting. A lawyer advises on the creditors expected to attend, the likelihood of a replacement application, and the strategy for the meeting — ensuring the administrator who is best placed to achieve the optimal outcome remains appointed.
Second Creditors' Meeting — DOCA or Liquidation
The second meeting of creditors (within 20 business days of the first meeting, or 25 business days for large companies) is the most important event in the VA. Creditors vote on whether to approve a DOCA, return the company to the directors' control, or proceed to liquidation. A lawyer prepares the DOCA proposal and manages the creditor vote to maximise the prospect of a successful outcome.
ATO in Voluntary Administration
The ATO is a priority creditor in VA for employee entitlements (superannuation) and a general creditor for income tax, GST, and PAYG. The ATO's vote at the second creditors' meeting is critical in many VAs. A lawyer with ATO debt experience engages with the ATO's Restructuring and Insolvency team to maximise the prospect of ATO support for a DOCA.
Director Liability Protection During VA
During voluntary administration, directors are protected from personal liability for insolvent trading — the administrator takes responsibility for the company's affairs. However, personal liability for director penalty notices and related-party transactions that occurred before the VA are not extinguished by the VA. A lawyer advises directors on their personal position throughout the administration and after.
The Legal Framework
Voluntary administration — Part 5.3A Corporations Act 2001.
The moratorium — s440A–440J Corporations Act 2001
On appointment of an administrator, an automatic moratorium applies under ss440A–440J of the Corporations Act 2001. Secured creditors cannot enforce their security for 13 business days after appointment (unless the Court orders otherwise). Owners of property used by the company cannot recover it during the administration. Lessors cannot terminate leases. Unsecured creditors cannot commence or continue proceedings or enforce judgments. This comprehensive moratorium is the most powerful immediate benefit of voluntary administration — it provides an immediate pause on all creditor enforcement action.
The administrator's powers — s437A
The administrator takes control of the company's business, property, and affairs under s437A of the Corporations Act 2001. Directors are suspended from management — though they must cooperate with the administrator and provide access to books and records. The administrator can sell assets, continue or terminate contracts, employ or dismiss employees, and take any action necessary to preserve the company's value during the administration period. Directors who obstruct the administrator commit an offence.
Employee entitlements in VA — priority claims
Employee entitlements — including outstanding wages, annual leave, and long service leave — are priority claims in the VA. The Fair Entitlements Guarantee (FEG) scheme provides a government safety net for employees whose entitlements cannot be paid by the company — covering outstanding wages (up to 13 weeks), annual leave, and long service leave. Superannuation entitlements are also priority claims in VA — the administrator must pay them before distributing to unsecured creditors. A lawyer advises on the priority order for payment of claims and the interaction with the FEG scheme.
Voidable transactions — the administrator's investigation
The administrator (and subsequently the liquidator if the company is wound up) has a duty to investigate the company's transactions in the period before the administration to identify voidable transactions — including unfair preferences (payments to creditors in the 6 months before the administration that prefer them over other creditors), uncommercial transactions, and transactions designed to defeat creditors. Where voidable transactions are identified, the liquidator can take recovery action against the recipients. A lawyer advises directors on their exposure to voidable transaction claims before and during the administration.
Personal liability during VA — s443A
An administrator is personally liable for debts incurred in carrying out the administration — including rent, employee entitlements incurred after appointment, and trading debts. The administrator has a right of indemnity out of the company's assets for these liabilities. This means that where the company's assets are insufficient to cover the costs of the administration, the administrator may require a personal guarantee from the directors before accepting the appointment — or may decline to act. A lawyer advises directors on the likelihood of the administrator requiring a guarantee and the implications of providing one.
Related party transactions and the VA — s444DA
Related parties of the company — including directors, their associates, and entities they control — are subject to special rules in the VA. Related party creditors cannot vote at the second creditors' meeting on a DOCA proposal in which they have an interest that is different from other creditors, unless the Court orders otherwise. This prevents directors from engineering a majority in favour of a DOCA that benefits themselves at the expense of independent creditors. A lawyer identifies related party creditors in advance and advises on the voting dynamics at the second creditors' meeting.
How It Works
One request. Free voluntary administration advice.
Tell us the company's total liabilities, the creditor pressure the business is facing, and any deadlines. A restructuring lawyer will assess whether VA is appropriate and advise on the next steps.
Submit Your RequestDescribe the situation
Tell us the company's total liabilities, the nature of creditor pressure (ATO, statutory demand, wind-up application, bank enforcement), whether the business is still trading, and any urgent deadlines.
Matched to a restructuring lawyer
Your request is matched to a restructuring lawyer experienced in voluntary administration — who can assess whether VA is appropriate and manage the appointment process urgently.
Free urgent consultation
A restructuring lawyer contacts you for a free consultation — assessing whether VA or SBR or safe harbour is most appropriate, explaining the practical consequences, and advising on the immediate steps to protect the business and the directors.