Voluntary Administration Still An Effective Restructuring Process, But The Australian Securities And Investments Commission’s Data Shows Timing Is Everything

Australian Securities and Investments Commission Review Report 836

The Australian Securities and Investments Commission (ASIC) has recently released Report 836 “Review of Voluntary Administration and Deed of Company Arrangement Process 2021 – 2025.”

The report marks the first time that ASIC has provided a detailed public report on the voluntary administration (VA) and Deed of Company Arrangement (DOCA) regime and examines data in relation to 3,528 VA appointments — including group appointments — over the last five years.

Despite a decline in the prevalence of VA appointments in the last 20 years, the report demonstrates that the VA regime remains an important restructuring mechanism. The data also specifically shows that DOCAs continue to deliver positive outcomes, particularly for larger and more complex businesses — but also that delay can materially reduce the prospects of a successful restructure.

The report confirms what restructuring advisors often see in practice: The voluntary administration process remains a powerful tool, but it is most effective when used before options have narrowed.

What the Data Tells Us About Voluntary Administration Today

• VA as a proportion of all external administrations has declined from 35-40% in 2000-06 to 10% in 2025-26.
• 5,020 companies entered VA between 2021 and 2025.
• 44% of VA appointments resulted in a DOCA process.
• Approximately 87% of proposed DOCAs were approved by creditors.
• 49% of DOCAs allowed businesses to continue trading. 22% facilitated business or asset sales.
• Nearly 90% of wholly effectuated DOCAs paid a dividend to unsecured creditors.
• Creditors’ Trusts were used in approximately 12% of DOCAs.

What Are DOCAs Used For?

The data demonstrates that modern VAs and DOCAs remain a useful tool to restructure businesses and are frequently used to:

• preserve viable businesses,
• facilitate recapitalisations,
• complete business sales,
• compromise debt, and
• deliver superior outcomes and certainty for creditors than would be achieved in an uncertain and costly liquidation process.

The Real Story Behind the Data — Size and Timing Drives Outcomes

The report provides commentary on how often DOCAs succeed, however a more interesting conclusion that can be drawn from the Report is the circumstances in which companies are most likely to implement them successfully.

• Companies with liabilities exceeding $10 million achieved DOCAs in approximately 48% of appointments.
• Smaller appointments were more likely to proceed directly to liquidation without any proposal being put to creditors.
• Winding up proceedings within 90 days of a VA appointment was a strong indicator that the company would not proceed to a DOCA. In 11% of VA appointments the company had faced winding up proceedings within 90 days of the appointment and of these 59% went into liquidation.
• The data suggests that in the right circumstances creditors are generally willing to support restructurings. The issue may be that many businesses seek advice only after their restructuring options have significantly narrowed.

Early Signs of Distress and Preserving Optionality 

Advisers, such as accountants and lawyers, are well positioned to observe the earliest signs of distress, which include:

• working capital shortages
• Australian Taxation Offices (ATO) arrears increasing
• supplier pressure
• covenant pressure
• creditor demands
• winding up applications and other litigation

By the time formal insolvency advice is sought, value has often already been lost.

The role of advisers is not necessarily to recommend a voluntary administration. The role is to ensure clients understand all available options while those options still exist, which may include:

• informal restructures
• safe harbour initiatives
• refinancing
• small business restructuring
• Formal appointments, including VA

The Cost of Delay

The report data confirms that the VA and DOCA processes continue to play an important role in Australia’s restructuring landscape.

However, the most important lesson from the data may be that successful restructurings are often determined before an administrator is appointed. ASIC’s report is really a story about what type of companies are best placed to benefit from a VA process, and the cost of delay.

For accountants and lawyers advising businesses under financial pressure, recognising stress and distress early and seeking specialist advice at the first signs of difficulty may be the difference between preserving value and managing a significant loss.

Regardless of the size of the business or restructuring regime available, there are several considerations that are applicable in respect of all business restructurings, including:

1. Establishing the actual financial position of the business, funding requirements and limitations. As part of strategy and business planning, a review of funding sources and options should be undertaken, including with current financiers, alternative lenders, equity investment, or unlocking capital through working capital improvement measures.
2. Anticipating the behaviour of key stakeholders (lenders, ATO, key suppliers, etc.) and effectively communicating with them as required.
3. Safe harbour as an early intervention tool to provide time for a restructure. Safe harbour provisions under the Corporations Act give directors breathing space to assess options and implement a restructuring plan for non-performing businesses, all while being protected from the personal liability normally associated with insolvent trading.
4. Exploration of formal insolvency options to restructure the business considering size, industry, and timing requirements. Formal insolvency appointments may be utilised as part of a broader restructuring strategy to enable the business to reemerge stronger and with less baggage from the crisis.

Early and decisive action provides increased optionality for the business.