Business Law - BUS101: Voluntary Administration Case Report

This report provides a comprehensive analysis of voluntary administration in business law, using a case study of TS Development. It details the company's history, the issues it faced, and the application of voluntary administration as a resolution strategy. The report defines voluntary administration, its necessity, and the role of the administrator, Mackay Goodwin, in this specific case. It examines the outcome, highlighting the administrator's success in averting liquidation and addressing financial challenges. The report also offers recommendations, comparing the effectiveness of voluntary administration with court processes and emphasizing the importance of the Deed of Company Agreement (DOCA) and negotiation. Finally, it concludes that while voluntary administration offers a less expensive and less complex alternative to court, the decisions and validity of court judgments are superior.

Running head: BUSINESS LAW
Voluntary Administration
Name of the student:
Name of the university:
Author note

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Table of Contents
Introduction:...............................................................................................................................2
Discussion:.................................................................................................................................2
History of the company:.........................................................................................................2
Mishap to the company:.........................................................................................................2
Voluntary administration:.......................................................................................................3
Necessity of voluntary administration:...................................................................................3
Role of the voluntary administrator in this case:....................................................................4
Result of the case:...................................................................................................................4
Recommendation:...................................................................................................................4
Conclusion:................................................................................................................................5
Bibliography:..............................................................................................................................6

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Introduction:
The objective of the report is to make a clear conception regarding the voluntary
administration and its applicability on the company-based disputes. In this report, problem
faced by the TS Development has been described and a back history of the company and the
problem faced by the company has been discussed. The definition of the voluntary
administration in this case and the achievement, if any, of the administrator has been
highlighted1. It is important to decide the issue whether there is any necessity to apply this
formula to resolve a company related problem or not.
Discussion:
History of the company:
The present company is a building company having its head office at Adelaide,
Australia. The main subject of the company is to make middle density construction and the
company has fifteen years experience in this ground. Tom Morgan has founded the company
and he is the present Managing Director of the company. The company is running its trade
business under the purview of two subsidiary companies such as Somerset Morgan and
Evoque Construction. It has been reported that the company is recently suffering from the
family dispute and that affected its business and remain many customers being dissatisfied
with its services.
Mishap to the company:
For many times, the company has been suffering from certain family disputes
and the financial dispute regarding the company has been pointed out regarding the southern
1 Harris, Jason. "Voluntary administration: Using voluntary administration to dilute minority
shareholdings." Australian Restructuring Insolvency & Turnaround Association Journal 28.1 (2016): 22.

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suburb property. It has been observed that the company is running its business through two
subsidiaries companies. However, the projects undertaken by both the companies were
lengthy and the company has to face various problems regarding the same. The foremost
affected version regarding the problem is the financial crisis and it has been noticed that the
company failed to complete the project and many clients have gotten incomplete flats. This
affected the reputation of the company and sustained millions of dollar liabilities for the
property development2.
Voluntary administration:
Voluntary administration can be treated as an option for the liquidation of an
insolvent company. In this process, the responsibility of assessing the assets of the company
is being entrusted on the hands of an independent person and he summarise all the
availabilities resolving the crisis and states the best option for the improvement of the
condition of the company as well as the owner and the creditors3. The company can appoint a
voluntary administrator if majority of the company will deliver their consent for the
settlement.
Necessity of voluntary administration:
It is a speedy process and the parties are choosing the option to avoid the
complexity of the court. It is an established provision of the law that when the process of
voluntary administration has been going on, no personal guarantee against the director of the
company can be taken by anyone. The creditors of the company can get certain chances to
2 Hibberd, Marelda, and Sam Kingston. "Voluntary administration-Is your appointment valid?." Australian
Restructuring Insolvency & Turnaround Association Journal 29.1 (2017): 18.
3 de Guglielmo, Giordano, et al. "Voluntary induction and maintenance of alcohol dependence in rats using
alcohol vapor self-administration." Psychopharmacology 234.13 (2017): 2009-2018.

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chalk out certain review regarding the director of the company and it facilitates the process of
negotiation in between the company and the creditors.
Role of the voluntary administrator in this case:
Mackay Goodwin was appointed as the voluntary administrator in the case and
the reason behind the appointment or choosing the option of administrator was that the
founder of the company did not want to wound up the company. The role of the administrator
is to assess the probabilities and prepare a Deed of Company Agreement (DOCA). The
administrators investigate into the company affairs and help to facilitate the process of
implementation. DOCA is an agreement where the process of assets division of the company
is described. To resolve the issue whether the problem regarding the company has been
sought out by the administrator or not, the opinion of the director of the company should take
into consideration4.
Result of the case:
It has been noticed that the managing director of the company was very much
pleased with the works of the administrators and it has been observed that the administrators,
to certain extent, succeed to resolve the financial crisis and problem between the company
director and the creditors. The administrators had able to save the company from being
wound up.
Recommendation:
It is a reported fact that the success parameters regarding the administrator’s
process is not good. It has been noticed that only 27% cases has achieved the main goal. The
recommendation should be in favour of the court process for the long lasting effect as the
4 Fu, Jenny, and Roman Tomasic. "The Use of Noncourt‐Based Corporate Rescue: Does the Australian
Voluntary Administration Procedure Provide a Model for China?." International Insolvency Review 26.2
(2017): 153-175.

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advice of the voluntary administration is lasting for five weeks. Besides that, the process is
also hectic some. It is not required that every party will follow the guidelines of the
administration. On the other hand, the decision of the court is binding in nature and the
parties are forced to abide by the order, else judicial process will be initiated against them. It
is also recommended that the process of voluntary administration be based on the DOCA and
initiate negotiation process between the company and the creditors.
Conclusion:
It can therefore be stated that the present case has been solved by the
interference of the voluntary administration5. However, apparently the process is low
expensive and it enhanced to avoid the complexity of the court. Still, the decision process of
the court and the validity of the court judgment is far better than the administrators.
5 Pitsis, Tyrone S., et al. "Governing projects under complexity: theory and practice in project
management." International Journal of Project Management 32.8 (2014): 1285-1290.

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Bibliography:
de Guglielmo, Giordano, et al. "Voluntary induction and maintenance of alcohol dependence
in rats using alcohol vapor self-administration." Psychopharmacology 234.13 (2017): 2009-
2018.
Fu, Jenny, and Roman Tomasic. "The Use of Noncourt‐Based Corporate Rescue: Does the
Australian Voluntary Administration Procedure Provide a Model for China?." International
Insolvency Review 26.2 (2017): 153-175.
Harris, Jason. "Voluntary administration: Using voluntary administration to dilute minority
shareholdings." Australian Restructuring Insolvency & Turnaround Association Journal 28.1
(2016): 22.
Hibberd, Marelda, and Sam Kingston. "Voluntary administration-Is your appointment
valid?." Australian Restructuring Insolvency & Turnaround Association Journal 29.1 (2017):
18.
Pitsis, Tyrone S., et al. "Governing projects under complexity: theory and practice in project
management." International Journal of Project Management 32.8 (2014): 1285-1290.