Liquidation, administration, restructuring: types of external administration in Australia

Before the appointment

When a company is insolvent

A company is insolvent when it cannot pay all its debts as and when they become due. Directors who let a company keep incurring debts while insolvent risk personal liability for insolvent trading, and serious breaches can lead to criminal charges.¹ The safe harbour rules protect directors who are actively developing a course of action that is reasonably likely to lead to a better outcome than immediate administration or liquidation.²

Statutory demands and winding up applications

Many insolvencies begin with a creditor. A creditor owed at least the statutory minimum can serve a statutory demand. If the company neither pays nor applies to have it set aside within 21 days, it is presumed to be insolvent, and the creditor can apply to the court to have it wound up. These applications are advertised on ASIC's published notices website. We counted 5,168 of them in FY2025-26.³

Rescue procedures

Voluntary administration

In a voluntary administration the directors (or occasionally a secured creditor or liquidator) appoint an independent administrator, who takes control of the company.⁴ The administrator investigates the company's affairs and reports to creditors, who then decide at a second meeting between three options: a deed of company arrangement, handing the company back to its directors, or liquidation.⁴ The whole process usually takes about five to six weeks. In FY2025-26, 1,435 companies entered voluntary administration for the first time.⁵

Deed of company arrangement

A deed of company arrangement (DOCA) is a binding deal between the company and its creditors, setting out how much they will receive and when. It is approved if a majority of creditors voting, both by number and by value, agree.⁴ Once the deed is signed it binds unsecured creditors, including those who voted against it. If the company fails to meet its obligations, the deed can be terminated and the company usually goes into liquidation.

Small business restructuring

Since 1 January 2021 small companies have had a cheaper alternative. A company with total liabilities of no more than $1 million can appoint a restructuring practitioner and propose a plan to creditors. Unlike in a voluntary administration, the directors stay in control of the business. The plan has to be put to creditors within 20 business days (extendable once by 10), and creditors then have 15 business days to vote.⁶ A company cannot use the process if it or one of its directors has been through restructuring or simplified liquidation in the previous seven years.⁶ Restructuring now accounts for well over a thousand first appointments a year.⁵

Liquidation

Creditors' voluntary liquidation

A creditors' voluntary liquidation (CVL) is the most common outcome: 6,386 companies in FY2025-26.⁵ The members resolve to wind up an insolvent company, usually on the directors' advice, and appoint a liquidator. The liquidator sells the assets, investigates the company's affairs and the directors' conduct, reports possible offences to ASIC and distributes what is left to creditors in the order the law sets out.⁴

Court liquidation

In a court liquidation the court orders the company to be wound up, usually on the application of a creditor, often the ATO. The court appoints the liquidator.⁴ Court liquidations rose to 3,144 in FY2025-26.⁵ Before the hearing the court can appoint a provisional liquidator to protect the assets while the application is decided.⁴

Simplified liquidation

Simplified liquidation is a faster, cheaper form of CVL for small companies. It is available where liabilities are no more than $1 million, the company's tax lodgements are up to date and it cannot pay its debts in full within twelve months. Creditors holding more than 25% of the debt by value can require the liquidator to use the full process instead.⁷

Members' voluntary liquidation

A members' voluntary liquidation (MVL) is not an insolvency. It is used to wind up a solvent company that can pay all its debts, typically when the owners want to close it down or restructure a group. The directors must first declare that the company can pay its debts in full within twelve months.⁴ MVLs show up in published notices but not in ASIC's insolvency statistics.

Receivership

Receivers act for a secured lender

A receiver is usually appointed by a secured creditor, typically a bank, under the terms of its security, and sometimes by the court. The receiver's job is to collect and sell enough of the secured property to repay that lender, not to act for creditors as a whole.⁴ Receivership can run alongside a voluntary administration or liquidation, which is common in larger collapses. In FY2025-26, 1,444 companies had a receiver or other controller appointed.⁵

What this means for creditors

Employees

Employees have priority over most unsecured creditors for unpaid wages, leave and redundancy pay. If a liquidated company cannot pay them, the Fair Entitlements Guarantee, a government scheme, covers a capped amount of these entitlements. Unpaid superannuation is not covered.⁸

Suppliers and other unsecured creditors

Unsecured creditors are paid last and often receive little or nothing. You lodge a proof of debt with the administrator or liquidator and can vote at creditors' meetings. Watching notices closely matters, because meetings are often called at short notice.

Where to find the notices

Every appointment, meeting, dividend and winding up application is published on ASIC's published notices website.³ InsolvencyRadar reads every notice, links it to the company and the appointed practitioner, and keeps it searchable. Browse the latest insolvencies, find who was appointed in our insolvency practitioner directory, or read the latest Australian insolvency statistics.