Australia: Financial Restructuring

Administrators facing onerous contracts lack the statutory power to disclaim them—a tool reserved exclusively for liquidators under section 568 of the Corporations Act. This article examines the three practical mechanisms available to administrators: repudiation to crystallise claims, Court protection under section 447A to shield personal liability, and carefully structured DOCAs that can release debts without crossing into unfair discrimination.

Cathro and Partners' expanded Cathro Clarity dashboard reveals diverging trends in Australian insolvency: corporate appointments have nearly tripled since FY22 while personal bankruptcies rose only 15%, with debt agreements now accounting for 43% of personal insolvencies. The data exposes striking industry patterns, particularly healthcare's disproportionate representation in personal bankruptcies compared to corporate failures, and construction's dominance across both categories.

The Australian Securities and Investments Commission has released its first comprehensive review of voluntary administration and deed of company arrangement outcomes, analyzing over 5,000 companies from 2021 to 2025. The report reveals critical insights into when these restructuring processes are most effective, showing that larger companies with liabilities exceeding $10 million have significantly higher success rates, while smaller companies may benefit from alternative insolvency pathways.

When a company enters Voluntary Administration, one of the administrator's first critical decisions is whether to continue trading the business. This decision involves careful evaluation of multiple factors including business viability, available resources, potential restructuring proposals, and the possibility of selling the business as a going concern.

As the 2026 financial year draws to a close, accountants and tax advisors face a critical juncture where year-end reporting often reveals hidden insolvency indicators in financially distressed companies. This analysis explores the warning signs embedded in EOFY financials, the personal exposure risks directors face through loan account arrangements, and the importance of early intervention strategies to protect stakeholders and explore restructuring options before a crisis unfolds.

Australia's 2026-27 Budget delivers the most significant tax reform in 25 years, fundamentally reshaping property investment incentives through negative gearing restrictions and capital gains tax changes while navigating a global oil crisis pushing inflation toward 5%.

Recent case provides a useful reminder of the importance of maintaining appropriate boundaries when advising distressed businesses.

Administrators should be careful to respond appropriately to the changing conditions of a company under administration.

When a company goes into liquidation, the appointed liquidator effectively steps into the shoes of the directors and assumes control of all company records.