What ASIC's review tells us about voluntary administration
What ASIC's review tells us about voluntary administration
While the Australian restructuring landscape has continued to evolve, the Australian Securities and Investments Commission's (ASIC) review of the voluntary administration (VA) and deed of company arrangement (DOCA) process remains one of the most comprehensive analyses of formal restructuring outcomes in Australia. Examining more than 5,000 organisations that entered VA between July 2021 and June 2025, representing approximately $71 billion in liabilities, the review provides valuable insights into how businesses use formal restructuring processes to preserve value, address financial challenges and create a pathway to recovery.
The review also highlights that outcomes vary depending on company size, funding availability, objectives of the restructuring, and how early action is taken.
Key findings
Some of the key findings of ASIC’s review include:
- 44 per cent of voluntary administrations resulted in an approved DOCA
- Companies with more than $10 million in liabilities were more than three times as likely to transition to a DOCA than those with liabilities below $250,000
- Nearly half of all DOCAs involved the business continuing to trade
- Around 22 per cent of DOCAs facilitated the sale of a business or assets
- 63 per cent of approved DOCAs included third-party funding and 83 per cent excluded related-party claims
- Almost 90 per cent of completed DOCAs paid a dividend to unsecured creditors, with a median return of 11.5 cents in the dollar
- The median cost of a voluntary administration was approximately $68,000, increasing significantly for larger and more complex appointments.
Voluntary administration is becoming more selective
VA appointments accounted for around 35 to 40 per cent of external administrations in the early 2000s. Today, that figure sits at approximately 10 per cent. According to ASIC, this reflects a long-term structural shift driven by insolvency reforms and the introduction of the small business restructuring (SBR) regime in 2021.
Rather than suggesting VA is in decline, the data points to restructuring pathways becoming more specialised. VA is being used where there is a realistic pathway to preserving value, through a business turnaround, sale, recapitalisation, or creditor compromise.
Company size matters
ASIC's analysis highlights the relationship between company size and restructuring success.
Nearly half of appointments involving liabilities greater than $10 million transitioned to a DOCA. By contrast, only around 15 per cent of appointments involving liabilities below $250,000 achieved the same outcome. Smaller companies were much more likely to proceed directly to liquidation, often without any restructuring proposal being put to creditors.
This reflects a reality seen across the restructuring market. Formal restructurings are most effective where there is underlying value to preserve - whether through operating cash flow, access to funding, or an executable sale process. Where those fundamentals are absent, the benefits of a VA can be limited.
What successful DOCAs have in common
The report highlights that DOCAs are not a one-size-fits-all solution, but a flexible framework that can be adapted to a range of commercial outcomes.
Some DOCAs are designed to facilitate business continuity, others enable business sales, while some provide a mechanism for compromising creditor claims where ongoing trading is no longer viable.
One factor that consistently appears in successful DOCAs is funding certainty. Third-party contributions featured in almost two-thirds of approved DOCAs and were often combined with the exclusion of related-party claims. These structures provide creditors with confidence that promised returns can be delivered.
By contrast, ASIC found DOCAs funded primarily through future trading profits were more likely to fail and subsequently enter liquidation.
Creditors generally receive better outcomes
Among DOCAs, almost 90 per cent delivered a return to unsecured creditors, with a median dividend of 11.5 cents in the dollar and an average return of 21.3 cents in the dollar.
By comparison, ASIC found unsecured creditors in liquidations often received little or no return. While every case is different, the findings suggest that where a restructuring is viable, a DOCA can deliver a better financial outcome for creditors.
The real lesson: act early
If there is one clear message from ASIC's review, it is the importance of timing.
Businesses that seek advice early, while funding options remain available and stakeholder support can still be secured, are more likely to achieve a successful restructuring outcome.
Once financial distress becomes entrenched, the available options narrow considerably.
For directors, lenders, and investors, VA remains a valuable restructuring tool. The challenge is recognising when to use it and acting before the opportunity to preserve value has passed.
How BDO can help
BDO's business restructuring team works with directors, lenders, and investors to assess available restructuring options and develop practical pathways for businesses experiencing financial distress.
Whether the objective is a turnaround, recapitalisation, sale process, or formal insolvency appointment, early advice can help preserve value and maximise available options.
