Voluntary administration
The process of ‘voluntary administration’ is a relatively new business rehabilitation scheme that was introduced into New Zealand company law on 1 November 2007.
This information sheet provides general information for companies considering administration.
Important information
This information sheet contains a summary of basic information on the topic of voluntary administration. It is not a substitute for legal advice.
Some provisions of the law referred to here may have important exceptions or qualifications. This document may not contain all of the information about the law or the exceptions and qualifications that are relevant to your circumstances.
You will need a qualified professional advisor to take into account your particular circumstances and to tell you how the law applies to you and your company.
The purpose of administration
Administration is intended to be a relatively short-term measure that freezes the company’s financial position while the administrator and the creditors determine the company’s future. In an administration an independent and suitably qualified person (an administrator) takes full control of the company to try to work out a way to save either the company or its business.
If it is not possible to save the company or its business, the aim is to administer the affairs of the company in a way that results in a better return to creditors than they would have received if the company had instead been placed straight into liquidation.
When is administration appropriate?
The critical determinants as to whether administration will be appropriate are:
- Whether the company has the support of secured creditors who have a charge over the whole or substantially the whole of the property of the company; and
- Whether the benefits to creditors of a continuation in trading or of a deferral of liquidation are likely to exceed the benefits for creditors achievable by any other means.
Other factors will include the:
- extent, nature and spread of the company’s liabilities; and
- attitude of key suppliers; and
- history of the company’s dealings with creditors; and
- availability of cashflow.
Further information
The start of a voluntary administration
The administration of a company begins when an administrator is appointed under Part 15A of the Companies Act 1993. The administrator must then give notice of their appointment , investigate the company's affairs and call meetings to decide on the future of the company.
What happens during a voluntary administration?
Administration is intended to be a relatively short-term measure that freezes the company’s financial position while the administrator and the creditors determine the company’s future. Following on from the watershed meeting there can be several different outcomes. What happens next depends on the decision made at the watershed meeting.
How could a voluntary administration affect you?
How are you affected if you are a director of a company that is in voluntary administration?
Form to file accounts of company in administration
Download the prescribed form to file accounts of a company in administration.
The completion of a voluntary administration
There are several ways a voluntary administration comes to an end.
The voluntary administration life cycle
A flow chart providing a guide to the major steps in the voluntary administration process.
