Voluntary Administrations rarely follow a straight path. They are complex, fast-moving, and often shaped by unpredictable factors such as shareholder disputes, funding delays, or shifts in buyer appetite. One recent matter we handled demonstrates just how valuable it can be to have a Director’s Advocate guiding the process from the director’s side.
Background: A Tech Start-up in Crisis
The company was a promising tech startup with strong growth potential but facing a cash burn of around $50,000 per month. The catalyst for distress was not poor performance, but a shareholder dispute that crippled decision-making and paused a planned capital raise.
When the business entered Voluntary Administration, the insolvency practitioner referred us to the founding director for two key reasons:
- The company’s monthly burn rate made it essential to develop a viable trading and funding plan quickly. The cash burn meant the practitioner was unable to take the job as a trade-on to save the business without a licence agreement, where the risk on ongoing trade would be funded by director.
- The director had no previous insolvency experience and needed practical guidance through the process.
The original plan was to use the director’s unencumbered home to fund three to four months of trading and put forward a sale proposal that would allow time for the planned funding round to proceed.
A Shift in Strategy
As the VA progressed, it became clear that the other shareholder was likely to make an offer to acquire the business with the intent of shelving it. This presented a real threat to the ongoing value of the technology and the livelihoods of those involved.
Recognising this, we shifted focus. Rather than relying solely on the initial sale plan, we worked with the director to identify and approach third-party buyers who could see the long-term potential of the business.
A Strategic Sales Process Under Pressure
Time was critical. The director was personally funding the business through a licence agreement, carrying ongoing trading risk throughout the VA. Within weeks, we developed and executed a highly targeted approach to around five potential buyers, including venture capital firms and CEOs of established companies within the same niche.
Each meeting was positioned as an integration opportunity, showing how the technology could strengthen or accelerate the buyer’s existing business. This approach reframed the conversation away from a distressed sale and towards a strategic acquisition.
The Outcome
The process achieved its goal. One of the approached buyers made a strong commercial offer based on the value proposition we presented. The director secured a position with the acquiring company, and the business is now moving toward commercialisation faster than before the Administration began.
Although the final outcome was different from the initial plan, it achieved what mattered most: preserving the business, protecting the technology, and providing the founder with a positive future.
The Value of Having a Director’s Advocate
This case illustrates an important truth. Voluntary Administrations are complex and can take unpredictable turns. Having a Director’s Advocate ensures that someone remains focused on the director’s position and the bigger picture — saving the business where possible, protecting the director’s interests where it is not.
A Director’s Advocate brings structure, experience, and financial insight to a situation that can easily become overwhelming. We help directors understand what is happening, anticipate what might come next, and act strategically to achieve the best possible outcome.
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