WHY SHOULD AN UNSECURED CREDITOR SUPPORT AN ADMINISTRATION?
• An administration leading to the execution of a Deed of Company Arrangement may enable a higher level of dividends to be paid to unsecured creditors in comparison to the alternatives. • An administration arrangement could have taxation advantages over a liquidation. For example, any tax losses of the company may be able to be preserved and used, which may ultimately result in a higher return to creditors. • The administrator of a company or of a deed of company arrangement does not have the power to challenge voidable transactions. So if a creditor has received a preferential payment, it may choose to support a Deed of Company Arrangement. • An administrator has the benefit of the statutory moratorium and is able to carry on the company’s business in an orderly manner whilst formulating a company arrangement. In many cases this can maintain asset values and produce a better result for unsecured creditors. • An administration may allow the company to continue to trade into the future,
