Voluntary Administration: What Business Owners Should Know Before Handing Over the Keys to the Administrator.

Voluntary administration is the best-known insolvency process in Australia and, for most owner-operated businesses, no longer the first one to reach for. It buys immediate protection from creditors and can save a business — but from the moment an administrator is appointed, you are no longer running your company. Your business can end up being charged high administration costs, and there may be an intent to put it into liquidation.

In a voluntary administration, our team looks out for you and your company to make sure it's compliant, follows the right process, and isn't a money grab on the company's bank accounts.

Here is how it works, what it costs you in control, and how to tell whether it is the right process or whether something lighter would do.

Voluntary Administration – The short version

• Voluntary administration sits in Part 5.3A of the Corporations Act 2001. Its stated purpose is to maximise the chance of the business continuing, or failing that, to produce a better return for creditors than an immediate winding up.
• Directors appoint the administrator by resolution, and control of the company passes to that administrator immediately. Your powers as a director are suspended.
• The process is fast: a first creditors’ meeting within 8 business days, and a second meeting at the end of a 20 business day convening period, where creditors decide the company’s fate.
• Creditors choose one of three outcomes: execute a deed of company arrangement, wind the company up, or hand it back to you.
• Since small business restructuring arrived, voluntary administration has become the less-used option for smaller companies — in the 12 months to 31 May 2025, restructuring appointments outnumbered voluntary administrations roughly two to one.

What voluntary administration is for

Voluntary administration is a formal insolvency process under Part 5.3A of the Corporations Act 2001. An independent registered liquidator takes control of the company, investigates its affairs, and reports to creditors on whether the business can be saved. Creditors then vote on what happens next.

The statutory object is deliberately two-sided: to keep the company, or as much of its business as possible, in existence — and if that is not achievable, to deliver creditors a better result than they would get from immediate liquidation. It is a process that can end in rescue or in winding up, and at the outset nobody knows which.

That dual purpose is worth sitting with. Directors sometimes appoint an administrator expecting a rescue and are surprised when creditors vote to liquidate. The decision is not yours to make once the process begins.

The first thing to understand: you lose control

This is the single most important practical fact about voluntary administration, and it is the point on which owners are most often underprepared.

On appointment, the administrator takes control of the company’s business, property and affairs. Under section 437C, you and your fellow directors cannot perform any function or exercise any power as an officer of the company unless the administrator gives written approval. You do not decide what the business sells, who it employs, which creditors are paid, or whether trading continues. The administrator does.

You also acquire obligations rather than rights. You must deliver the company’s books and records to the administrator, and provide a report on the company’s activities and property — a detailed statement of its affairs — generally within five business days. Failing to co-operate is an offence.

For a business built around its owner, this is not a formality. Your staff will be told an administrator has been appointed. Your customers will find out. Suppliers will demand cash on delivery. If the value in your business is the relationship you personally hold with clients, that value is exposed the moment the appointment is announced.

Before you appoint, be clear about what you are giving up

• You stop being the decision-maker on day one, and you do not get the company back unless creditors vote to hand it back at the second meeting.
• The administrator chooses whether to keep trading. They become personally liable for debts they incur, and for rent after the first five business days, which makes them appropriately cautious.
• You cannot control the outcome. Creditors can vote to wind the company up even where you believe it is viable.

If your company has liabilities of $1 million or less and your lodgements are current, small business restructuring may achieve a similar result while leaving you in charge — compare the two before you commit.

Who can appoint an administrator

Route	Section	When it applies
The directors	s 436A	By resolution, where the board believes the company is insolvent or likely to become insolvent. This is how most administrations begin.
A secured creditor	s 436C	Where the creditor holds enforceable security over the whole or substantially the whole of the company’s property.
A liquidator	s 436B	Where a company already in liquidation may be better served by administration.

The point of the directors’ route deserves emphasis: it is a decision you can still make. If you wait until a secured creditor appoints, you lose the ability to choose the practitioner and the timing, and you will usually have spent months trading while insolvent in the meantime.

The timetable

Voluntary administration is short by design. The statutory clock is measured in business days and moves quickly. When undertaking a Voluntary Administration, our team works with you and the administrator to get things in place and run smoothly.

Stage	Timing	What happens
Appointment	Day 0	The administrator takes control. The moratorium applies immediately. Creditors and ASIC are notified.
First creditors’ meeting	Within 8 business days	Creditors may appoint a committee of inspection or replace the administrator. The company’s fate is not decided here.
Convening period	20 business days	The administrator investigates and prepares the report to creditors. Extended to 25 business days where the administration begins in December or close to Good Friday.
Second creditors’ meeting	Within 5 business days before or after the convening period ends	Creditors vote on one of three outcomes. This is the meeting that matters.
Deed executed	Within 15 business days of the resolution	If creditors resolve in favour of a deed of company arrangement, it must be executed within this window.

The convening period can be extended by the court, and in complex matters it routinely is. For a small business it usually is not, which means the whole process from appointment to decision is commonly six to seven weeks.

The three outcomes

At the second meeting, creditors resolve that the company do one of three things. A resolution passes on a majority in both number and value of the creditors voting; where those two majorities diverge, the chairperson may exercise a casting vote.

• Execute a deed of company arrangement. The rescue outcome. A DOCA is a binding agreement between the company and its creditors that compromises the debts — creditors accept an agreed return, often over time, and the balance is released on completion. It binds all unsecured creditors, including those who voted against it.
• Wind the company up. The administration converts to a creditors’ voluntary liquidation and the administrator typically becomes the liquidator. The business ends and assets are realised for creditors.
• End the administration. Control returns to the directors. This is rare, because it requires creditors to be satisfied the company is solvent and can meet its debts — which is seldom the case by the time an administrator has been appointed.

What a deed of company arrangement actually does

A DOCA is the vehicle through which a business is saved in an administration, and in structure it is not unlike a restructuring plan: creditors take an agreed return, funded from continued trading, asset sales, or a contribution from the director or a third party. A DOCA is more flexible than a restructuring plan — it can run longer, deal with a wider range of claims, and be tailored in ways a plan cannot. It is also considerably more expensive to put in place and administer.

Whether control returns to you when the deed is executed depends on the deed’s terms. Many DOCAs return the company to its directors under the supervision of a deed administrator. That is a negotiated outcome, not an automatic one.

What administration protects you from

• A moratorium on claims. Unsecured creditors cannot begin or continue proceedings against the company without the administrator’s consent or the court’s leave. Owners and lessors cannot simply repossess property in the company’s possession.
• A stay on ipso facto clauses. Counterparties cannot terminate contracts merely because the company has entered administration, which protects leases and key supply agreements for contracts entered into since July 2018.
• A stay on personal guarantees. Under section 440J, a guarantee of a liability of the company cannot be enforced against a director, or their spouse or relative, during the administration, except with the leave of the court.
• An answer to a director penalty notice. Appointing an administrator within the 21 days in a non-lockdown director penalty notice remits the penalty. It is one of the four statutory remission options.
• An end to insolvent trading exposure. Debts incurred after the appointment are the administrator’s responsibility, not yours. Appointing promptly is the conventional way to stop insolvent trading exposure accruing.

What it does not do

• It does not release your personal guarantees. Section 440J is a stay during the administration, not a discharge. A guaranteed creditor can pursue you once the administration ends unless you negotiate separately.
• It does not remit a lockdown director penalty notice. Where the underlying amounts were not reported on time, only payment of the company’s liability removes your personal penalty — and a DOCA that pays part of the debt reduces your penalty only by the amount actually paid.
• It does not stop a secured creditor holding security over substantially the whole of the company’s property. That creditor has a decision period of 13 business days in which it can still enforce.

It does not protect you from claims for insolvent trading in respect of debts incurred before the appointment, or from the liquidator’s investigation if creditors vote to wind the company up.

Voluntary administration or small business restructuring?

For most owner-operated companies this is the real question, and it is worth answering deliberately rather than defaulting to the process you have heard of.

	Voluntary administration	Small business restructuring
Who runs the business	The administrator. Your powers as director are suspended.	You do. The practitioner advises and certifies.
Eligibility	Any company that is insolvent or likely to become insolvent.	Liabilities of $1m or less, lodgements up to date, employee entitlements due and payable paid, no use in 7 years.
Timetable	Second meeting at the end of a 20 business day convening period; roughly 6–7 weeks overall.	20 business days to propose, 15 business days to vote.
Rescue vehicle	Deed of company arrangement — flexible, can run longer, broader reach.	Restructuring plan — simpler, up to 3 years.
Creditor approval	Majority in number and value of those voting, with a chairperson’s casting vote available.	Majority in value of those who respond; related creditors excluded.
Relative cost	Substantially higher — the administrator runs the company and takes on personal liability.	Lower; median practitioner remuneration around $22,000 in ASIC’s review period.
Visibility to staff and customers	High. An external party is visibly in charge.	Lower. The business continues to be run by its owner.
Non-lockdown DPN	Remitted on appointment within 21 days.	Remitted on appointment within 21 days.

The usage figures tell you how the market has answered this question. In the 12 months to 31 May 2025, of 13,413 companies entering external administration, small business restructurings accounted for about 20 per cent and voluntary administrations about 10 per cent. For companies inside the restructuring eligibility criteria, the lighter process has become the default.

That does not make administration obsolete. It makes it the right tool for a narrower set of situations — which is the next question.

When voluntary administration is the right call

• Liabilities are above the $1 million restructuring threshold, or the company cannot meet the other eligibility conditions in the time available.
• The company has complex creditor arrangements, contingent claims or litigation that a simple restructuring plan cannot deal with.
• The business has genuine value but needs to be sold as a going concern, which an administrator can run as a formal process.
• There is a secured creditor whose position has to be negotiated, and an independent practitioner improves the prospect of a sensible outcome.
• Insolvent trading exposure is accruing and needs to stop immediately, and restructuring eligibility cannot be achieved quickly enough.
• Relationships with creditors have broken down to the point where they will not accept a proposal from you, but may accept one from an independent administrator.

When it is the wrong call

• The company is eligible for small business restructuring, and your continued involvement is what makes the business worth saving.
• The business is not viable at any scale. Administration adds a layer of cost before an outcome that was always going to be liquidation — going straight to a creditors’ voluntary liquidation is cheaper and more honest.
• You cannot fund the process. Administration is not free, and an administrator who cannot see how their fees will be met may decline the appointment.
• The only real problem is ATO debt on a company that trades profitably and has current lodgements. That is a restructuring conversation, or in some cases simply a payment arrangement.

Frequently asked questions

Don’t go into a Voluntary Administration blind; getting our professional advice is the first step on a successful administration and deed of company arrangement.

• We advise business owners and directors independently, free of conflict, on ATO tax debt, director liability and the full range of restructuring options — including whether voluntary administration is warranted, or whether a lighter process would achieve the same result.
• Bring us your integrated client account statement, your lodgement position, your last two years of financials and a list of secured creditors and guarantees. That is enough for us to tell you which process fits and what it will cost you in control.
• If a director penalty notice has been issued, or a secured creditor is threatening to appoint, call first — the order in which things happen materially changes the outcome.