Voluntary Administration for Australian Directors: What Happens, What It Costs, and What to Do Now

Reviewed by Alex Hanley, Chartered Accountant — H&H Tax and Business Advisors
Last reviewed: 11 July 2026

Voluntary administration is a formal insolvency process under Part 5.3A of the Corporations Act 2001 (Cth). The directors appoint an independent administrator — an ASIC-registered liquidator — who takes control of the company while a moratorium pauses most creditor enforcement. Within roughly 20 to 25 business days, creditors vote on one of three outcomes: a deed of company arrangement (DOCA), returning the company to its directors, or liquidation.

If you are reading this because the company can no longer pay its way and the pressure is coming from every direction at once, you are exactly who this page was written for. Voluntary administration (VA) is not an admission of failure — it is one of the legitimate, structured paths the law provides, and for some companies it may allow the business to continue in some form. This guide walks through the whole process: what triggers it, what happens day by day, what it typically costs, what your duties are, and how it compares with small business restructuring and liquidation.

Need to talk it through now? Call 0468 061 936 for a confidential, no-obligation conversation, or send an enquiry and we’ll call you back.

Is your company at the point of voluntary administration?

Most directors don’t wake up one morning and decide to appoint an administrator. The signs build for months. Under the Corporations Act, a company is insolvent when it cannot pay its debts as and when they fall due — and ASIC — Insolvency: a guide for directors (INFO 42) points to warning signs like these:

• Consistently unable to pay suppliers on their trading terms, and juggling which invoices get paid each week.
• Relying on the overdraft or personal funds to make payroll.
• Building up unpaid ATO obligations — PAYG withholding, GST, superannuation. (If ATO debt is the core of the problem, start with our ATO debt guide.)
• A statutory demand has arrived — the company has 21 days to pay, come to an arrangement, or apply to set it aside, or it is presumed insolvent under the Corporations Act.
• A Director Penalty Notice has been issued, putting company tax debts on your personal shoulders.
• The bank has declined to refinance or extend facilities.
• Creditors are threatening — or have started — legal action.

None of these alone proves insolvency. Together, they mean it is time to stop hoping and get formal advice. Here is why timing matters so much: once a company is insolvent, or a director has reasonable grounds to suspect it is, the director’s duty shifts towards protecting creditors’ interests — and allowing the company to incur new debts while insolvent can make the director personally liable for those debts under section 588G of the Corporations Act. Appointing an administrator stops the clock on new insolvent trading exposure and pauses most creditor enforcement while options are worked out properly.

What is voluntary administration under the Corporations Act?

Voluntary administration is governed by Part 5.3A of the Corporations Act 2001 (Cth). Its object, set out in section 435A, is rescue-first: to administer the affairs of an insolvent company in a way that maximises the chances of the company, or as much as possible of its business, continuing in existence — or, if that isn’t possible, that results in a better return to creditors than an immediate winding up.

That object matters in practice. The administrator is not appointed to shut the company down; they are appointed to work out, quickly and independently, whether the business is worth saving and on what terms.

The moratorium: breathing space, immediately

From the moment an administrator is appointed, a statutory moratorium takes effect. According to ASIC’s voluntary administration guidance for directors and Part 5.3A, during the administration:

• Unsecured creditors generally cannot begin or continue court proceedings, enforce judgments, or recover their property from the company without the administrator’s consent or the court’s permission.
• Landlords and other owners of property the company uses generally cannot re-enter premises or repossess equipment without the administrator’s consent or the court’s leave.
• Winding-up applications are effectively paused while the administration runs its course.
• For many contracts entered into on or after 1 July 2018, “ipso facto” clauses — terms that let the other side terminate purely because the company has entered administration — are stayed under the Corporations Act. This can be a powerful tool for holding key contracts together while the company restructures.

The moratorium starts at appointment and runs until the administration ends — usually at the second creditors’ meeting, which is generally held within 25 business days of the appointment (up to 30 business days over the Christmas and Easter periods); in practice most administrations run roughly 20–25 business days, and the court can extend the convening period in complex matters. The key point for a director under enforcement pressure: the protection only begins when the administrator is appointed. Until then, every creditor remedy stays live.

How an administrator is appointed

There are three routes into voluntary administration under Part 5.3A:

1. By the directors — the most common route. The board resolves that, in its opinion, the company is insolvent or likely to become insolvent, and appoints an administrator.
2. By a secured creditor — a creditor holding security over the whole, or substantially the whole, of the company’s property can appoint an administrator.
3. By a liquidator — a liquidator (or provisional liquidator) of the company can appoint an administrator if they think the company may be saved.

Whoever appoints them, the administrator must be an ASIC-registered liquidator — an independent, regulated professional. Restructure Partners does not administer voluntary administrations; we are an advisory that helps directors understand whether VA is the right path and, if it is, connects them with registered practitioners who can take the appointment.

What happens when the company enters voluntary administration

Here is the process from the director’s chair, step by step, based on ASIC’s guidance and Part 5.3A:

1. Day 1 — control passes to the administrator. The administrator takes effective control of the company. Your powers as a director are suspended: no new contracts, no asset sales, no significant decisions without the administrator’s consent. The administrator notifies ASIC and creditors of the appointment, takes control of the bank accounts, and secures the company’s assets and records.
2. The first week — trade or not? The administrator decides whether the business keeps trading. It often does — continuing to trade can preserve goodwill, customers and jobs, all of which protect value for creditors. The administrator carries personal liability for debts incurred while trading during the administration (with a right of indemnity from the company’s assets), so this decision is made carefully and commercially.
3. Within 8 business days — the first creditors’ meeting. Creditors meet to decide whether to form a committee of inspection and whether to keep or replace the administrator.
4. Weeks 2–4 — investigation and proposals. The administrator reviews the books and records, identifies related-party transactions, assesses whether the business is viable, and explores whether a deed of company arrangement (DOCA) can be put to creditors. This is when you, as director, prepare your Report on Company Activities and Property (ROCAP — formerly known as the Report as to Affairs, or RATA) and sit down with the administrator to explain the company’s history, the causes of its difficulties, and any DOCA proposal you or others want to fund.
5. Before the second meeting — the administrator’s report. The administrator sends creditors a detailed report covering the company’s financial position, the causes of failure, any evidence of insolvent trading or voidable transactions, each available option — DOCA, ending the administration, or liquidation — and the administrator’s recommendation. Their assessment of any DOCA proposal carries real weight with creditors.
6. Around 20–25 business days in — the second creditors’ meeting. Creditors vote on the company’s future. The three possible outcomes are covered in detail below.

How long does it all take? A standard administration runs about 20 to 25 business days from appointment to the second meeting. Where a DOCA proposal is complex — multiple funders, a business sale under negotiation, disputed claims — the court commonly extends the convening period, adding weeks (sometimes months) to the timetable.

The administrator’s role vs the director’s role

The administrator controls the business. They step into all the powers of the board: they can trade, sell assets, hire and terminate staff, renegotiate contracts, and close unprofitable parts of the operation. Their primary duty is to the company’s creditors as a whole, and they are required to investigate the company’s affairs and report to creditors on its position, the causes of failure, and any potential claims — including insolvent trading and voidable transactions.

Directors remain in office, but their powers are suspended. Your legal obligations do not go quiet just because someone else is running the company. Under the Corporations Act and ASIC’s guidance, directors must:

• Deliver the company’s books and records to the administrator, and give access to everything they ask for.
• Complete and return the ROCAP within the statutory timeframe (generally within 5 business days of the administration beginning, unless the administrator allows longer).
• Attend meetings and interviews, and answer the administrator’s questions honestly. Giving false or misleading information to an administrator is a serious offence.
• Disclose related-party dealings — loans to or from directors and family, asset transfers, inter-company balances.

Cooperation is not just a legal duty; it is also strategic. Administrators form a view about directors quickly, and that view flows into the report creditors read before they vote on your DOCA proposal.

Mistakes directors make in the lead-up — and one hard warning

In the anxious weeks before an appointment, directors sometimes make decisions that come back to hurt them badly:

• Preferring certain creditors — paying out a related party, a mate’s invoice, or a personally guaranteed debt ahead of others. These payments can be clawed back as unfair preferences, and they damage your credibility.
• Informal, undocumented arrangements — handshake deals with creditors that unravel under scrutiny.
• Moving or stripping assets — transferring equipment, stock, the client list or the business name to a new entity so the “new company” can keep trading while the old one carries the debts. Be very clear: this is illegal phoenix activity. It is creditor-defeating conduct that carries serious civil and criminal penalties for directors and for advisers who facilitate it, and ASIC and the ATO actively pursue it — see ASIC’s guidance on illegal phoenix activity. If anyone — including an adviser — suggests shifting assets before an appointment, walk away. A business can sometimes be lawfully sold or restructured through a VA or DOCA at proper value with full disclosure; that is a completely different thing, done in daylight, through the administrator.
• Failing to engage on a DOCA — the rescue outcome usually needs the directors to bring a funded proposal. Directors who disengage often watch the company drift into liquidation by default.

Director personal liability and risk

Insolvent trading

Appointing an administrator stops new insolvent trading liability accruing: from the appointment, the administrator becomes responsible for debts incurred in trading the business. It does not erase liability for insolvent trading that occurred before the appointment — the administrator investigates and reports on it, and a later liquidator can pursue directors personally under section 588G of the Corporations Act. The practical takeaway: the earlier you act, the smaller the window of exposure. (Directors who take a documented, advised course of restructuring action may also have safe harbour protection under section 588GA — ask about it before, not after.)

Personal guarantees and security

The moratorium is broader than many directors expect on this point, but the protection is temporary. During the administration, a creditor generally cannot enforce a personal guarantee against a director — or a director’s spouse or relative — without the court’s permission, under Part 5.3A (see also ASIC’s guide). But the guarantee itself is not cancelled. Once the administration ends, the bank, landlord or supplier holding your guarantee can pursue you personally for any shortfall. What VA genuinely creates is a negotiating window: guaranteed debts can be addressed in a DOCA, or settled directly, while the moratorium holds. Bring every guarantee you have signed to your first advice meeting — directors regularly forget guarantees buried in supplier credit applications.

DPNs and ATO debt

Voluntary administration interacts with Director Penalty Notices in a precise way, and the timing rules are unforgiving:

• Non-lockdown DPN: appointing a voluntary administrator within the 21 days from the date on the notice remits the director penalty — see how the 21 days is counted. The same is true of appointing a small business restructuring practitioner or beginning winding up within the window.
• Lockdown DPN: where the company’s returns were lodged late (or not at all), the personal liability is already permanent. Placing the company into voluntary administration, restructuring or liquidation does not remit a lockdown DPN — only paying the debt, or a narrow statutory defence, removes it. See our lockdown DPN guide.

Source: ATO — Director penalty notices. If a DPN is part of your picture, the DPN clock and the VA decision have to be managed together — this is one of the most common and most time-critical situations directors face.

Reputation, future directorships and credit

One voluntary administration — especially one that ends in a completed DOCA — does not automatically disqualify you from being a director. ASIC’s disqualification powers are directed at repeated corporate failures, serious misconduct and insolvent trading, not at directors who confronted an insolvency honestly and followed the legal process (ASIC — Insolvency: a guide for directors (INFO 42)). Your personal credit can be affected if guarantees are called, and future lenders will ask questions. Transparency and cooperation through the process are the best protection for your future.

Employees, suppliers and customers

Jobs, wages and entitlements

If the administrator keeps the business trading, wages for work performed during the administration are paid as a priority expense, ahead of unsecured creditors. Accrued entitlements — annual leave, long service leave, redundancy — are treated differently depending on the outcome: under a DOCA they are dealt with in the deed (employee priorities must generally be preserved unless employees agree otherwise), and if the company instead goes into liquidation, eligible employees can claim unpaid wages, leave, payment in lieu of notice and redundancy through the Fair Entitlements Guarantee (FEG), up to statutory caps. FEG is only available in liquidation, and it does not cover unpaid superannuation.

Communicating with your people

The administrator handles formal creditor communications, but your team will look to you. Staff need honest reassurance about wages and continuity; key customers need confidence about supply; landlords and critical suppliers need to understand the process and timeline. Work with the administrator on what can be said and when — keeping key staff through the administration is often the difference between a business that can be rescued and one that can’t.

Contracts, leases and the cost base

The administrator can choose which contracts the company continues to perform, and the ipso facto stay (for many post-1 July 2018 contracts) prevents counterparties terminating purely because of the administration (Corporations Act). Used well, the administration period is a chance to reset an oversized cost base — exiting bad leases and loss-making contracts — before a DOCA locks in the go-forward structure.

The three possible outcomes at the second creditors’ meeting

At the second meeting, creditors vote on one of three futures for the company. A resolution generally needs a majority of creditors in number and in value; where the two split, the administrator as chair may have a casting vote (ASIC guidance).

1. The company returns to the directors’ control. Uncommon. It happens where the administrator concludes the company is in fact solvent, or creditors are satisfied it can pay its way — for example, after a capital injection or the resolution of a one-off crisis.
2. The company enters a deed of company arrangement (DOCA). The rescue outcome, and usually the goal when directors choose VA. Creditors accept a binding compromise — typically a fund paying cents in the dollar — in full satisfaction of their claims, and the company continues. More below.
3. The company goes into liquidation. If creditors reject the DOCA proposal, or no workable proposal emerges, the company moves into liquidation — usually a creditors’ voluntary liquidation, often with the former administrator becoming liquidator. The liquidator realises the assets, distributes the proceeds by the statutory priorities, investigates voidable transactions, insolvent trading and director conduct, and reports to ASIC.

The DOCA in brief

A deed of company arrangement is a binding agreement between the company and its creditors about how the company’s affairs and debts will be dealt with. In a typical small-business DOCA, the directors, related parties or a third-party investor contribute money into a deed fund; a deed administrator distributes that fund to creditors; and on completion, the company is released from the compromised debts and trades on. Creditors vote on the proposal at the second meeting, informed by the administrator’s assessment of whether it beats the likely return in liquidation. A well-constructed DOCA may allow the business to continue and can return more to creditors than a wind-up — but no proposal is guaranteed to pass, and a DOCA must genuinely offer creditors a better deal than the alternative. We cover structures, timelines and creditor dynamics in detail in our deed of company arrangement guide.

Weighing up whether a DOCA could realistically be funded in your situation? That is exactly the conversation to have early. Call 0468 061 936 — confidential, no obligation — or send an enquiry.

What voluntary administration costs

Honest numbers, because you deserve them: voluntary administration is not cheap, and anyone who quotes you a suspiciously low figure is leaving something out.

• Administrator’s fees for a small business VA typically run $30,000 to $80,000, depending on the size of the company, whether the business trades on, the state of the records, and how contested the process becomes. Larger or messier administrations cost more.
• Fees are usually paid from the company’s assets as a priority expense. Where the company’s assets won’t cover them, directors or third parties (often the DOCA proponent) fund the administration.
• Administrators’ remuneration must be approved by the creditors (or, failing that, the court) — it is disclosed and voted on, not simply invoiced (ASIC guidance).

Treat every figure on this page as a typical range, not a quote. Your numbers depend on your facts. Before any appointment, ask the proposed administrator for a written estimate of total fees, what they cover, and how they will be funded — a reputable practitioner will give you one.

By comparison, small business restructuring — where it is available — is generally significantly cheaper, with practitioner fees typically in the $10,000 to $30,000 range on a similar timeline. That cost difference is one reason eligibility for SBR is usually the first thing to check.

VA vs SBR vs liquidation: which path fits?

Sources: Corporations Act 2001, Pt 5.3A; ASIC — Voluntary administration: a guide for creditors (INFO 74); ATO — Director penalty notices.

As a rough decision framework:

• Voluntary administration tends to fit when total debts exceed $1 million (so SBR is unavailable), when viability is genuinely uncertain and needs an independent assessment creditors will trust, when a secured creditor holds security over the whole business and needs to be brought to the table, or when enforcement is imminent and the company needs the moratorium now.
• SBR tends to fit when debts are under $1 million, the underlying business is viable but over-indebted, the directors want to stay in control, and tax lodgements and employee entitlements are in order.
• Liquidation tends to fit when the business is not viable in any form and the responsible course is an orderly, lawful close.

There is no universally “best” option — only the one that fits your company’s facts. That assessment is precisely what an initial advice conversation is for. Call 0468 061 936 — confidential, no obligation — or send an enquiry and we’ll call you back.

How to prepare before appointing an administrator

If VA looks likely, preparation saves time, money and credibility. Gather:

• The last two years’ financial statements and tax returns.
• Current aged payables and aged receivables listings.
• The company’s ATO running balance account, plus any DPNs or ATO correspondence.
• A list of employee entitlements — accrued annual leave, long service leave, and any super arrears.
• A schedule of secured creditors and their registered security interests.
• Copies of every personal guarantee you (or your family) have signed.
• A list of material contracts and leases.

And ask the practitioner these questions at the first meeting — good ones will answer all of them plainly:

1. What are your estimated total fees, and how will they be funded?
2. What is your preliminary view of the business’s viability?
3. Is there a realistic prospect of a DOCA here, and what would it need to look like?
4. What is my personal exposure — insolvent trading, guarantees, DPNs?
5. Is there an alternative to VA that fits better — SBR, a solvent workout, or liquidation?
6. What happens to my personal guarantees during and after the process?
7. What should I do — and not do — in the next 48 hours?

Next steps: act while the options are still open

Everything protective about voluntary administration — the moratorium, the pause on new insolvent trading exposure, the structured path to a DOCA — starts only when an administrator is appointed. Until then, creditors keep enforcing, ATO penalties and interest keep accruing, and personal exposure keeps growing. Acting early does not commit you to VA; it means the decision gets made with the most options still on the table.

Restructure Partners is an Australian specialist restructuring and insolvency advisory. We work with directors nationwide to assess voluntary administration honestly alongside small business restructuring, liquidation and informal options — and where a formal appointment is the right path, we connect you with ASIC-registered practitioners who can act. Only registered liquidators can be appointed as administrators; what we bring is a clear-eyed assessment of which door to walk through, before you’re standing in it.

• Call 0468 061 936 — confidential, no obligation, and we’ll tell you straight if VA isn’t the right fit.
• Or send an enquiry — confidential, and we’ll call you back.

Frequently asked questions

What is the main purpose of voluntary administration?

The object of voluntary administration, set out in section 435A of the Corporations Act 2001, is to maximise the chances of the company (or its business) continuing in existence — or, if that is not possible, to achieve a better return for creditors than an immediate winding up. An independent administrator assesses the company, and creditors then vote on its future at the second creditors’ meeting.

How long does voluntary administration last?

A standard voluntary administration runs for roughly 20 to 25 business days, ending at the second creditors’ meeting — which is generally held within 25 business days of the appointment (up to 30 over the Christmas and Easter periods) — where creditors decide the company’s future. The court can extend the convening period in complex cases, which can add weeks or months. If creditors approve a deed of company arrangement, the administration ends and the deed takes over.

Does voluntary administration protect directors from insolvent trading claims?

Partly. From the date of appointment, the administrator becomes responsible for debts incurred while the company trades, so no new insolvent trading liability accrues to the directors. Voluntary administration does not erase liability for insolvent trading that happened before the appointment — the administrator investigates the company’s affairs, and a later liquidator can pursue directors personally. Acting early limits the exposure.

What happens to personal guarantees during voluntary administration?

During the administration, a creditor generally cannot enforce a personal guarantee against a director (or a director’s spouse or relative) without the court’s permission. The guarantee itself is not cancelled — once the administration ends, the creditor can pursue the director unless the debt has been dealt with. The moratorium creates a window to negotiate, not an escape.

How much does voluntary administration cost for a small business?

Administrator fees for a small business voluntary administration typically fall in the range of $30,000 to $80,000, depending on the company’s size and complexity. Fees are usually paid from company assets as a priority and must be approved by creditors. Where the company has few assets, directors or third parties sometimes fund the administration. Treat any figure as a typical range, not a quote — ask for a written fee estimate up front.

What happens to employees during voluntary administration?

If the administrator keeps the business trading, wages for work done during the administration are paid as a priority expense. Accrued entitlements such as annual leave, long service leave and redundancy are dealt with under a deed of company arrangement or, if the company later goes into liquidation, may be covered by the Fair Entitlements Guarantee (FEG) up to statutory caps. FEG does not cover unpaid superannuation.

Can the company keep trading during voluntary administration?

Yes, if the administrator decides trading is in creditors’ interests. The administrator controls the business and is personally liable for debts incurred while trading, so the decision is made carefully. Continuing to trade is common where it preserves goodwill, keeps customers, and protects the value of the business ahead of a possible deed of company arrangement or sale.

When should a company use voluntary administration instead of small business restructuring?

Small business restructuring is only available where total liabilities are $1 million or less, tax lodgements are up to date, and employee entitlements are paid. Voluntary administration suits companies that do not meet those criteria — debts over $1 million or lodgements behind — or where viability is genuinely uncertain, secured creditors hold security over the whole business, or an immediate moratorium against enforcement is needed.

Sources: Corporations Act 2001 (Cth), Part 5.3A (legislation.gov.au) · ASIC — Voluntary administration: a guide for creditors (INFO 74) · ASIC — Illegal phoenix activity · ATO — Director penalty notices · Fair Entitlements Guarantee (Department of Employment and Workplace Relations)

This page is general information only, not legal or financial advice, and Restructure Partners is not affiliated with the ATO or ASIC. Whether voluntary administration, restructuring, or liquidation fits your company depends on its specific circumstances — timelines, eligibility, costs and outcomes all vary. Please seek advice from a qualified professional about your own position before acting.