The voluntary administration regime provides a procedure whereby an insolvent company can offer its unsecured creditors a commercial compromise of its debts. If the creditors accept the proposal, it is a means by which the company, or its business, can continue in existence.
However, there are often circumstances where it is simply not feasible to enter into a commercial compromise with a company's unsecured creditors. In these cases, the regime is used to place the control of the company into the hands of an insolvency practitioner who will administer the business, property and affairs of the company whilst the company transitions into liquidation.
The attractions for the process are the speed with which it can be implemented and the flexibility it offers to the practitioner when managing the business.
The process itself is only an interim process (the outcome in most instances being either a liquidation or Deed of Company Arrangement) and it therefore requires an experienced practitioner capable of making swift and accurate decisions regarding the affairs of the company.
Liquidation is a process for the winding up of a company's affairs to meet the claims of creditors.
This will occur when the company cannot pay all of its debts in full.
The liquidation process is initiated by either the Court or the members (ratified by creditors) and is designed to ensure all of the assets of the company are realised and appropriate investigations and statutory reporting are conducted with a view to distributing the residual assets to the creditors in payment of their debts.
These are processes whereby a secured creditor of a company (i.e. a Bank) takes over control of the assets covered by its security for the purposes of realising those assets to repay the Banks debt.