Voluntary administration, small business restructuring or liquidation: how to choose

An insolvent company has three formal options. In a small business restructuring the directors stay in control and put a plan to creditors, but total liabilities must be $1 million or less. In a voluntary administration an administrator takes full control and creditors decide the outcome within about a month. In a liquidation the company stops trading, its assets are sold and it is deregistered. The choice usually turns on whether the business is still viable and how much time is left.

The three options at a glance

	Small business restructuring	Voluntary administration	Liquidation
Who controls the company	The directors. The restructuring practitioner acts as the company’s agent and does not run the business day to day.	The administrator takes full control.	The liquidator takes control. The directors’ powers end.
Who can use it	Companies whose total liabilities are not more than $1 million, and where neither the company nor its directors have used restructuring or simplified liquidation in the past seven years.	Any company whose directors resolve that it is insolvent, or likely to become insolvent.	Any insolvent company. It can also be ordered by a court.
How long	20 business days to propose the plan, extendable once by up to 10 business days, then 15 business days for creditors to vote.	First creditors’ meeting within 8 business days; second within 25 business days (30 around Christmas or Easter).	Runs until the assets are realised and distributed. The company is deregistered three months after the liquidator’s final return.
Does the business keep trading	Yes. That is the point of it.	Usually, while the administrator assesses it.	Rarely, and only to sell it as a going concern.
How it ends	Creditors accept the plan and are paid under it, or they reject it and the restructuring ends.	Creditors vote to hand the company back, accept a deed of company arrangement, or wind the company up.	The company is wound up and deregistered.

Small business restructuring

Restructuring was built for smaller companies. The directors keep running the business while a restructuring practitioner helps put a plan to creditors, usually offering a set amount over a set period. Creditors have 15 business days to return their statements, and the plan is accepted if a majority in value of the affected creditors who vote support it.

It only works if the company qualifies. Total liabilities must be $1 million or less on the day the restructuring begins, employee entitlements that are due must be paid, and tax lodgements must be up to date. Neither the company nor its directors can have used restructuring in the previous seven years.

Voluntary administration

Voluntary administration suits a larger or more complicated company, or one where control needs to pass to an independent person quickly. An administrator takes full control and investigates, and creditors decide the outcome at the second meeting: return the company to the directors, accept a deed of company arrangement, or wind it up.

If creditors accept a deed, the company must sign it within 15 business days of that meeting, or it goes into liquidation automatically.

Liquidation

Liquidation is the right answer when the business is no longer viable. A liquidator realises the assets, investigates what happened, reports to ASIC and pays creditors in the order the law sets: the costs of the liquidation, then employee wages and superannuation, then leave, then retrenchment pay, then unsecured creditors. Each category is paid in full before the next receives anything.

A liquidation can be voluntary, when shareholders resolve to wind the company up, or ordered by a court on the application of a creditor. Directors, shareholders and ASIC can apply too.

How directors usually choose

The business is viable but the debt is not. Restructuring if the company qualifies, otherwise voluntary administration.
Liabilities are over $1 million, or the structure is complex. Voluntary administration.
A creditor is already at the door. A statutory demand or a winding-up application compresses the timetable. Voluntary administration can still be started after a winding-up application is filed, but advice is needed the same week.
The business has stopped, or there is nothing left to save. Liquidation.

Whichever route is taken, the directors’ personal exposure through guarantees and director penalty notices needs to be looked at at the same time. It does not disappear when the company is wound up.

How Greengate Advisory can help

Our registered liquidators act as restructuring practitioners, administrators and liquidators, and will tell you plainly which of the three fits your situation, including when none of them does. The first consultation is free and confidential, and we can explain the options in English, Mandarin, Cantonese or Korean. Call (02) 8318 3699 in Sydney or (07) 3868 1888 in Brisbane.

Common questions

What is the difference between voluntary administration and liquidation?

Voluntary administration is a pause in which an administrator takes control and creditors decide what happens next, usually within about a month. Liquidation winds the company up: the assets are sold, creditors are paid in the order the law sets, and the company is deregistered.

Can directors stay in control?

Only in a small business restructuring. The directors keep running the business while the restructuring practitioner helps put a plan to creditors. In voluntary administration and liquidation an external practitioner takes control.

What is the $1 million limit for small business restructuring?

The company’s total liabilities must not be more than $1 million on the day the restructuring begins. Above that, voluntary administration is the alternative.

How long does each option take?

Restructuring allows 20 business days to propose a plan, extendable once by up to 10 business days, then 15 business days for creditors to vote. In voluntary administration the first creditors’ meeting is within 8 business days and the second within 25 business days, or 30 around Christmas or Easter. A liquidation runs until the assets are realised and distributed.

What happens if creditors reject a restructuring plan?

The restructuring ends and the company returns to its normal status. The debts remain payable and creditors can resume recovery action, so the next step needs to be planned before the vote, not after it.

Can a company be put into voluntary administration after a winding-up application is filed?

Yes, but the timetable is tight and the court’s position has to be considered. Get advice immediately rather than waiting for the hearing date.

Authored by Patrick Loi, Managing Principal and Registered Liquidator. Patrick has over 20 years of business restructuring and insolvency experience and founded Greengate Advisory. Meet our team.

This page is general information, not advice about your situation. Sources: ASIC Small business restructuring and the restructuring plan, Voluntary administration: a guide for creditors and Liquidation: a guide for creditors. Checked 29 September 2026.