ASIC has released its most detailed public review of Australia’s voluntary administration and Deed of Company Arrangement process.
The report covers 5,020 companies that entered voluntary administration between 1 July 2021 and 30 June 2025. It examines which businesses used the process, what happened after an administrator was appointed, the returns achieved for creditors and the factors that influenced whether a DOCA succeeded.
There are plenty of statistics in the report. Some are encouraging. Others should prompt harder questions.
The real value of the review is not simply knowing that 44 per cent of voluntary administrations resulted in a DOCA, or that the median return to unsecured creditors under wholly effectuated DOCAs was 11.5 cents in the dollar.
It is understanding what sits behind those numbers.
For directors, accountants and lawyers, the report reinforces a point that is often lost when insolvency options are discussed: voluntary administration is not a standard solution that can be applied once a business reaches a particular level of debt.
Its effectiveness depends heavily on when the process begins, what the business still has to preserve and whether a credible proposal can be put to creditors.
The voluntary administration regime is still doing what it was designed to do
Voluntary administration has been part of Australia’s corporate insolvency framework since 1993.
Its purpose is to provide an insolvent company, or as much of its business as possible, with an opportunity to continue. Where that is not achievable, it is intended to produce a better return for creditors than an immediate winding up.
ASIC’s overall conclusion is that the regime remains a flexible and useful part of the insolvency framework, particularly for larger and more complex appointments. It can support continued trading, a sale of the business or assets, or a negotiated compromise with creditors.
The report found that:
- 44 per cent of VA appointments entered a DOCA
- 50 per cent entered voluntary liquidation
- 6 per cent entered court liquidation
- 49 per cent of approved DOCAs involved the business continuing to trade
- 22 per cent involved a business or asset sale
- 81 per cent of finalised DOCAs were wholly effectuated.
These figures support the view that voluntary administration can preserve value and provide a pathway forward. They do not mean that it will save every business.
The most important finding may be the difference timing makes
ASIC found that approximately 11 per cent of voluntary administrations had been preceded by a winding-up application within the previous 90 days.
Of those appointments, 59 per cent ultimately went into liquidation. Only around 26 per cent proceeded to a DOCA, compared with 45 per cent where there had been no prior winding-up application.
By the time a creditor has commenced winding-up proceedings, the company may already be dealing with depleted cash reserves, reduced supplier support, overdue employee obligations, enforcement action and a loss of confidence from key stakeholders.
A voluntary administration can provide a moratorium and create space to assess the business, but it cannot recreate value that has already disappeared. Nor can it manufacture a viable proposal where there is no funding, no profitable core business, no potential buyer and / or no contribution to enable a return to creditors.
For directors, the lesson is straightforward. Do not wait for a statutory demand, winding-up application or Director Penalty Notice before investigating the company’s options.
For accountants and lawyers, it is a reminder that the point of referral matters. A client who is still trading, has accurate financial information and retains the support of key stakeholders presents a very different restructuring opportunity from one referred after enforcement action has begun.
Early advice does not guarantee that a business can be saved. It does mean there are more choices available and more time to assess them properly.
A DOCA needs more than creditor approval
ASIC found that 87 per cent of proposed DOCAs were approved by creditors. That sounds like a strong result, and it is. However, approval is only the beginning.
Of the 1,100 DOCAs that had been finalised by 31 May 2026:
- 81 per cent were wholly effectuated
- 17 per cent subsequently entered creditors’ voluntary liquidation
- 2 per cent ended with another outcome.
The structure of the proposal had a significant bearing on whether it succeeded.
DOCAs that failed were much more likely to depend on future trading profits. Approximately 63 per cent of failed DOCAs relied on operating profits to fund contributions, compared with around 30 per cent of DOCAs that were wholly effectuated. They were also less likely to include a third-party contribution.
This does not mean a DOCA funded from future profits is inherently flawed. For some businesses, it may be the most logical structure. It does mean the underlying assumptions need to withstand serious scrutiny.
A proposal based on future trading should be tested against questions such as:
- Has the cause of the financial distress actually been addressed?
- Is the core business profitable before legacy debt repayments?
- Are the cashflow forecasts realistic?
- Is working capital available?
- Can the business meet its ongoing tax, superannuation and employee obligations?
- What happens if revenue falls below forecast?
- Is the director willing and able to make the operational changes required?
A DOCA should not simply extend the period in which an unviable business continues to trade. The objective is to create a sustainable outcome or produce a better return than liquidation. That requires a proposal grounded in commercial reality, not optimism.
Third-party funding often makes the difference
Almost two-thirds of approved DOCAs involved a contribution from a third party. The median contribution was $264,000.
Where a third-party contribution was made, it represented an average of 86 per cent of the estimated funds available under the deed. In almost half of those appointments, the third-party contribution funded the entire deed.
This tells us something important about how many successful arrangements are constructed.
A DOCA is often not funded solely by what remains within the company. Additional money may need to come from a director, shareholder, related entity, investor, purchaser or another external source.
That contribution may be justified because it:
- allows the business to continue
- protects a valuable contract, licence or customer base
- supports the sale of the business as a going concern
- delivers creditors a better return than liquidation
- provides greater certainty and a faster distribution.
The availability of external funding should therefore be explored early.
Directors should consider what resources may be available and what commercial value could be protected by contributing to a proposal. Advisers should help clients examine these questions before the company reaches the point where all available funds are being consumed by day-to-day survival.
Larger appointments were more likely to produce a DOCA, but size is not the only issue
ASIC found that businesses with larger liabilities were substantially more likely to enter a DOCA.
Approximately 48 per cent of appointments involving more than $10 million in liabilities entered a DOCA, compared with only 15 per cent of appointments involving liabilities below $250,000. Smaller appointments were more likely to result in liquidation without a DOCA proposal being put to creditors. There are several possible reasons.
Larger businesses may have more assets, a stronger underlying operation, greater access to funding or more value attached to preserving the business as a going concern. They may also have more stakeholders willing to participate in a restructuring.
For a smaller company, the cost of voluntary administration may be significant relative to its remaining assets and the amount available for creditors.
ASIC reported median approved remuneration of approximately $68,000 for the VA stage and $33,000 for the DOCA stage. For wholly effectuated DOCAs, the median combined cost across both processes was approximately $111,000.
That does not make VA inappropriate for small businesses. It means the likely benefit needs to justify the cost.
For an eligible small business, Small Business Restructuring may provide a lower-cost process while directors remain in control. However, it has strict eligibility requirements and less flexibility in some areas. A VA and DOCA may be better suited where the circumstances involve employee arrears, complex creditor groups, related company issues, a business sale, significant director loan accounts or the need to negotiate the proposal at a creditors’ meeting.
As outlined in our earlier comparison of the VA, DOCA and SBR regimes, neither process is a one-size-fits-all solution. The company’s eligibility, creditor profile, funding, employee obligations and commercial objectives all need to be assessed.
The dividend is important, but it is not the whole outcome
Almost 90 per cent of wholly effectuated DOCAs in ASIC’s adjusted population paid a dividend to unsecured creditors.
The average dividend was 21.3 cents in the dollar and the median was 11.5 cents. By comparison, most VAs that proceeded to liquidation were not expected to provide any return to unsecured creditors.A dividend of 11.5 cents may appear modest when viewed without context.
The correct comparison, however, is not with payment in full. It is with the likely return if the company had entered liquidation immediately.
The value of a DOCA may also extend beyond the unsecured creditor dividend. Depending on the circumstances, it may:
- preserve employment
- maintain customer and supplier relationships
- allow a viable part of the business to continue
- facilitate a going-concern sale
- protect the value of contracts or intellectual property
- reduce disruption across a related company group
- return control of the company to its directors.
ASIC found that control reverted to directors in approximately 76 per cent of DOCAs, rising to 88 per cent where the company continued trading after the DOCA was executed.
These broader outcomes need to be considered when evaluating whether a proposal is genuinely better than liquidation.
What directors should take from the report
The report should not be read as evidence that a director can appoint an administrator and assume a restructuring will follow.
It shows that VA works best when there is something meaningful to work with.
That may include:
- a fundamentally viable business burdened by legacy debt
- a profitable division that can be preserved or sold
- reliable financial records
- access to third-party funding
- a credible purchaser
- stakeholder support
- sufficient time to develop a realistic proposal.
Directors should also understand that they will give up control of the company during the VA period. The administrator must independently investigate the company’s affairs and provide creditors with an opinion about its future.
The better prepared the company is before the appointment, the more effectively that period can be used.
What accountants and lawyers should take from the report
Professional advisers are often the first people to see the warning signs.Those signs may include repeated ATO payment arrangements, unpaid superannuation, short-term borrowing used for operating expenses, deteriorating margins, overdue lodgements, growing director loan accounts or suppliers moving the company onto cash-on-delivery terms.
The adviser’s role is not necessarily to determine the insolvency solution.It is to recognise when specialist advice is required and make the referral while meaningful options remain.
That early referral can also protect the existing adviser-client relationship. An insolvency practitioner should complement the work of the accountant or lawyer, not displace them. The adviser’s knowledge of the client, its history and its financial position can be critical to assessing the available pathways.
The report confirms the value of VA, but also its limits
ASIC’s review provides useful evidence that voluntary administration remains capable of preserving businesses, facilitating sales and delivering better outcomes for creditors.It also shows why the process cannot be considered in isolation.
The outcome depends on the financial position at appointment, the viability of the underlying business, the availability of funding, the structure of the proposed DOCA and the time available to develop it.
The most valuable question for a director or adviser is “Given this company’s position today, what could voluntary administration realistically achieve, and is there a better option?”
That is a question best considered before circumstances make the decision on the director’s behalf.
This article provides general information only and does not constitute legal, accounting or insolvency advice. Each company’s circumstances should be assessed independently by appropriately qualified advisers.