Appointing a voluntary administrator under Part 5.3A
Voluntary administration is a directors’ appointment designed to provide a breathing space to maximise the chance of survival through a DOCA, or to achieve a better return for creditors than an immediate liquidation.
This is an 8-step workflow for appointing a voluntary administrator under s 436A of the Corporations Act 2001 (Cth), covering the directors’ resolution, DOCA pathway, and first meeting of creditors.
Before you start
- Board resolution scheduled with all directors available
- Proposed administrator's consent and DIRRI obtained
- Books and records, asset register, and creditor list assembled
- Safe harbour protections under s 588GA considered and documented
The workflow
Form and record directors’ opinion
Form and record the directors’ opinion under s 436A(1) that the company is insolvent or likely to become insolvent, documenting the basis and timing.
Obtain administrator's consent and DIRRI
Obtain the proposed administrator's written consent to act and the Declaration of Independence, Relevant Relationships and Indemnities (DIRRI) before the meeting.
Pass the directors’ resolution
Pass a resolution of directors appointing the voluntary administrator. Confirm quorum, record the resolution, and retain evidence of service on the administrator.
Notify chargees and other stakeholders
Notify any secured creditor with a security interest over the whole or substantially the whole of the company's property, and ASIC via Form 505.
Manage the decision period
During the decision period for the secured creditor, assist directors with the book and records handover, and prepare the Report on Company Activities and Property (ROCAP).
Convene and attend the first meeting
Assist the administrator to convene the first meeting within 8 business days and deal with any committee of inspection and replacement of administrator resolutions.
Evaluate DOCA proposals and investigations
Evaluate any Deed of Company Arrangement proposals against the alternative of winding up. Assist directors with information for the s 439A report.
Attend the second meeting and execute outcome
Attend the second meeting where creditors resolve to execute a DOCA, end the administration, or place the company into liquidation, and assist with execution formalities.
What you will have at the end
A validly appointed voluntary administration under Part 5.3A with a clear pathway to DOCA, liquidation, or return of control to directors, and a defensible record of the directors’ decision.
Common issues
- Directors’ resolution passed without quorum or without proper minutes
- DIRRI not obtained before appointment, creating independence issues
- Secured creditor with all-property security not notified in time
- Safe harbour defence under s 588GA not properly invoked or documented
- ROCAP incomplete, delaying the s 439A report and second meeting
Run this workflow on a real matter
Quillio drafts the directors’ resolution, DIRRI checklist, notices to secured creditors, and ROCAP framework. See /practice-areas/commercial-lawyers or start a free trial.
This workflow is a general guide. Appointment of an administrator should involve specialist insolvency advice and a qualified registered liquidator.
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