The voluntary administration procedure in the Corporations Act was introduced in 1993. Prior to this, the only formal mechanism for a company to compromise with its creditors was by a creditors’ scheme of the arrangement, a process often regarded as costly, time-consuming and cumbersome.
The primary objective of voluntary administration is to provide for the business, property and affairs of an insolvent company to be administered in a way that:
- maximizes the chances of the company, or as much as possible of its business, continuing in existence; or
- if it is not possible for the company or its business to continue in existence – it results in a better return for the company’s creditors and members than would result from an immediate winding up of the company.
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