Why Voluntary Administration Should Be Considered - BWA

The Undersold Solution – Voluntary Administration.

The Undersold Solution – Voluntary Administration.

BWA Insolvency focuses on business recovery and we are specialists in voluntary administration (VA). In this post, I want to highlight how VA is a positive alternative for businesses facing liquidation or receivership.

Insolvent businesses can be saved

These are tough economic times and it is little wonder that many businesses are struggling to survive. Financial obligations to pay creditors start to pile up with many business owners opting to close their doors. However, that may not be the only choice available. In 2007, a regime was introduced into New Zealand law that provides a rehabilitative option for companies experiencing insolvency and possible liquidation.

Voluntary Administration (VA) is by no means an easy option nor is it for the faint of heart. But, if business restoration is the desired outcome rather than a miserable decline toward liquidation, then voluntary administration should be considered.

When a company becomes illiquid its structure serves to strangle the business activity and rob it of its ablility to survive. Voluntary Administration arrests this situation by providing breathing space for the company to consider the options available. In the moratorium period, individual creditor demands give way to the rights of the general body of creditors allowing time for a controlled approach to be adopted to address the issues consuming the business.

The Voluntary Administration Process

Starting the voluntary administration process is normally achieved by the directors’ appointment of an administrator.  The administrator takes control and responsibility of the business while working with the company's directors to establish the best course of action.  It is essential for the directors to be fully engaged and committed to the process; after all, they are the most knowledgeable about the affairs of the company. Not all companies will survive the voluntary administration process, but it will not be the process that is to blame  – it is more likely to be that the engagement came too late. The safety net can only be of value to those that are above it.

Talk to the experts

BWA specialise in business recovery and insolvency. We have achieved excellent results in this highly specialised aspect of its insolvency practice.  In this short video Mike Robins and Craig Green discuss how voluntary administration saved their business.

If you have a company that is experiencing difficulties contact us to discuss whether voluntary administration is an option.

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