Guide Overview

Comparative table of Australian restructuring and insolvency processes

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This table provides a high-level overview of the restructuring and insolvency processes available in Australia, comparing their purposes, effects, advantages and disadvantages.
  Voluntary administration/DoCA Schemes of arrangement Receivership  Liquidation
Object To maximise the chances of the company or its business continuing to trade, or (if that is not possible), to achieve a better return for creditors than would likely be the case if it were wound up
A deed of company arrangement (DoCA) typically facilitates a financial restructuring by compromising the claims of creditors.
To facilitate a financial restructuring, usually by way of a compromise or arrangement between the company and its creditors.To enable a secured creditor to realise the assets the subject of its security in order to repay the debt owed to the secured creditor. To collect and realise the company's assets, distribute the proceeds of their sale to the company's creditors and wind up the company's affairs.
  • Directors appoint administrators if company is or is likely to become insolvent.
  • An administrator may also be appointed by secured creditors with all-assets security on default under a security/loan agreement.
  • Liquidator
  • Board of directors (typically)
  • Creditors
  • Shareholders
Appointed by secured creditor on default under a security/loan agreement.
  • Application to the court, usually by a creditor (official liquidation).
  • If the company is insolvent, by resolution of both its members and its creditors (creditors' voluntary liquidation).
  • If the company is solvent, by resolution of its members (members' voluntary liquidation).
Position of secured creditors
  • Paramount – can choose to stand outside administration process, including in any restructuring plan (DoCA) because security is paramount.
  • Cram-down not possible.
Cram-down is possible.

Paramount – can choose to stand outside the liquidation process by enforcing security.

Position of unsecured creditorsControl the process – but can vote only on a restructuring plan that involves unsecured assets.Cram-down is possibleNo voting or controlControl the process – but able to vote only in relation to unsecured assets
  • VA provides for general moratorium on actions or proceedings against the company and its property (subject to exceptions for certain secured creditors and property owners).
  • DoCA restructuring is highly flexible – variety of outcomes possible, eg.debt-for-equity swap, equity transfer, balance sheet restructuring.
  • DoCA restructuring is fast, relatively low cost and subject to low voting thresholds (>50% in number and value of creditors who vote).
  • Creditors can vary the DoCA by resolution at a meeting of creditors.
  • The court can terminate a DoCA.
  • Can be implemented without commencement of formal insolvency process.
  • Flexible – variety of outcomes possible – eg debt-for-equity swap, balance sheet restructuring, extension/rescheduling of debts, transfer of obligations to a new company.
  • Cram-down of secured creditors possible.
  • Possible to release creditors' claims against third parties.
  • Possible to bind a class of the company's creditors (eg lenders or its secured creditors) and leave other classes of creditors (eg trade creditors) unaffected.
  • Speed
  • Secured creditor paramount
  • Receiver can be appointed "over the top" of simultaneously appointed voluntary administrators, allowing access to VA moratorium.
  • Can facilitate credit bidding and other loan to-own strategies (see Chapter #)
  • Remaining assets of the company realised.
  • Liquidator can claw back the benefit of those transactions effected before the commencement of the winding-up which preferred particular creditors, were uncommercial, involved unfair loans, were unreasonable director-related transactions or which were undertaken to defeat or delay creditors.
  •  No cram-down of secured creditors.
  • Cannot release creditors' claims against third parties (eg the company's guarantors).
  • Cannot bind classes of the company's creditors – all creditors vote as one class.
  • If a scheme discriminates between creditors or creditors have different rights against the company, they must be divided into classes to consider the proposed scheme and each class must approve the scheme by the statutory majority
    (> 50% in number and 75% in value of creditors who vote)
  • Court-intensive
  • Time-consuming and expensive
  • The scheme can be varied or terminated only by proposing a new scheme.
  • Asset sales may require extensive marketing campaign.
  • Balance sheet restructuring is difficult – focus is on "realise and repay".
  • Recovery-focused – not a restructuring mechanism.


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The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.

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