Voluntary administration: Patterns of corporate decline

Date of this Version


Document Type

Journal Article

Publication Details

Interim status: Citation only.

Routledge, J. & Morrison, D. (2009). Voluntary administration: Patterns of corporate decline. Company and securities law journal, 27(2), 95-107.

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2009 HERDC submission. FoR code: 1501

© Copyright 2009 Thomson Reuters (Professional) Australia Limited


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.

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This document has been peer reviewed.