Voluntary Administration: Patterns of Corporate Decline

13 Pages Posted: 2 Aug 2009 Last revised: 26 Nov 2019

See all articles by James Routledge

James Routledge

Hitotsubashi University

David S. Morrison

The University of Queensland - T.C. Beirne School of Law

Abstract

Australian companies in financial distress prefer to select the option of voluntary administration (VA) offered by Pt 5.3A of the Corporations Act 2001 (Cth). A board's choice to enter a company into a VA is premised upon the idea that it is preferable to take early action when the business is facing solvency difficulty. Such early action allows for the possibility of rescuing the business. This article examines whether directors cause businesses to trade in extenuating financial circumstances for too long a period before entering the company into a VA thereby shortening the chances of a successful business rescue. The empirical analysis presented suggests that timely entry into a VA is critical, and that the VA process is not being used in a timely manner.

Keywords: corporate bankruptcy, insolvency, voluntary administration, Australian public companies

JEL Classification: K22

Suggested Citation

Routledge, James and Morrison, David S., Voluntary Administration: Patterns of Corporate Decline. C&S Law Journal, Vol. 27, p. 95, 2009, University of Queensland TC Beirne School of Law Research Paper No. 09-23, Available at SSRN: https://ssrn.com/abstract=1441604

James Routledge

Hitotsubashi University ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8601
Japan

David S. Morrison (Contact Author)

The University of Queensland - T.C. Beirne School of Law ( email )

The University of Queensland
St Lucia
4072 Brisbane, Queensland 4072
Australia

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
429
Abstract Views
2,200
Rank
124,700
PlumX Metrics