Briefing

Australia | Voluntary administration and DOCAs: practical insights

The Australian Securities and Investments Commission has published a report on the performance of Australia’s key restructuring and insolvency tools: voluntary administrations and deeds of company arrangement. We have used ASIC’s data to produce practical insights on how to effectively deploy the VA and DOCA process.

The Australian Securities and Investments Commission (ASIC) has published its review on the operation of voluntary administrations (VAs) and deeds of company arrangement (DOCAs) during the period 1 July 2021 – 30 June 2025 (Report).¹

The Report provides the most granular public dataset to date on how VAs and DOCAs perform and confirms that while the VA process remains a flexible restructuring tool, its effectiveness is closely linked to:

the size and complexity of the appointment;
the structure of any DOCA; and
the quality of the funding or compromise offered to creditors.

Key takeaway: DOCAs are not a single-purpose mechanism. ASIC’s data shows they are being used to support the continuation of business, facilitate asset sales and provide a mechanism to compromise creditor claims. The most important practical question is whether the proposed structure is realistic, sufficiently funded and properly disclosed to creditors.

How did DOCAs perform during the period?

Review population	5,020 companies entered VA, grouped into 3,528 appointments.²
VA outcomes	44% of VAs entered into a DOCA, 50% entered voluntary liquidation and 6% entered court liquidation.³
DOCA outcomes	81% of finalised DOCAs were wholly effectuated⁴ and 17% entered a creditors’ voluntary liquidation.⁵
DOCA creditor returns	21.3 cents in the dollar, on average unsecured creditor dividends were 21.3% of claims in wholly effectuated DOCAs, median 11.5 cents.⁶

Highlights from the Report

VAs account for a smaller proportion of insolvency appointments. VA appointments increased during the review period but represented only about 10% of external administrations in FY25 and FY26, compared with 35 – 40% in FY00 – FY06 and 15% in the 2010s.⁷ This can be contextualised by the increasing use of the small business restructuring process, which provides an alternative pathway for small businesses seeking to restructure.
Scale matters. Larger appointments were materially more likely to produce an approved DOCA: 48.3% of appointments with liabilities above AU$10 million transitioned to a DOCA, compared with 15.4% for appointments with AU$1 to AU$250,000 in liabilities.⁸
Smaller appointments are more likely to end in liquidation. ASIC observed that less than one-third of appointments with liabilities below AU$1 million resulted in an approved DOCA, raising questions about whether VA is being used where the company’s financial deterioration is too far advanced and another insolvency pathway may have been more appropriate.
DOCAs were used in different ways. Of the 1,500 approved DOCAs, 49% involved continued trading, 22% involved a business or asset sale and a further 22% involved no sale and no continued trading and often involved compromise or distribution mechanisms rather than trading restructures.⁹
Funding structure is critical. DOCAs relying on future trading profits generally took longer to complete and were more likely to fail and enter liquidation. By contrast, many non-trading DOCAs operated as a compromise or distribution mechanism and were supported by third-party contributions and related party claim exclusions.
Group appointments are common. ASIC found that about 15% of grouped appointments involved two or more related companies, with these grouped appointments accounting for around 40% of companies entering VA.¹⁰ These appointments could involve greater complexity, affecting the administration, reporting and duration of the VA and DOCA process.
Estimated returns did not greatly affect DOCA approval. Only 16% of proposed DOCAs were estimated to return more than 50 cents in the dollar, with more than 90% of these proposals transitioning to a DOCA.¹¹ The majority of DOCA proposals estimated that unsecured creditors would receive dividends of either 1 – 10 cents or 11 – 25 cents in the dollar and, of these;

Estimated dividend (cents)	VAs where DOCA proposed	% of VAs (where DOCA was proposed)	% of VAs that transitioned to a DOCA
1-10	536	31.8%	87.7%
11-25	537	31.9%	86.4%

Related party exclusions: a key feature of the process. ASIC found that approximately 83% of approved DOCAs excluded the claims of some or all of the company’s related parties.¹² In theory, excluding such claims should improve returns to “at arm’s length” (unrelated) creditors. However, this may result in less scrutiny of and investigations into the company’s affairs than would occur in a liquidation.
Creditors’ trusts: an underused tool? Creditors’ trusts were only used in a minority of DOCAs overall but were more common in larger and / or more complex appointments. ASIC commented in its Report on the need for clear disclosure of the trustee’s role, trust costs, the treatment of claims and anticipated timing of distributions.
Costs. ASIC reported a median cost of approximately AU$68,000 for a VA and a median cost of approximately AU$33,000 for a DOCA.¹³ For wholly effectuated DOCAs with both VA and DOCA returns, the median combined remuneration was around AU$111,000, with larger matters accounting for a significant share of total remuneration paid to administrators.¹⁴

Practical insights for companies, creditors and liquidators

Early engagement remains essential. The lower DOCA conversion rate for smaller appointments suggests that viable restructuring options may be limited if advice is sought only after the company’s position has materially deteriorated.
Creditors should interrogate the source of DOCA funding. A proposal funded by third-party money, asset realisations or related-party compromises presents different risks to one funded by future trading profits. Where trading profits are central to a proposal, assumptions on future profitability and the administrator’s financial analysis deserve close attention.
Related party exclusions: pros and cons. Excluding related party claims can improve returns to unrelated creditors but may result in less scrutiny of and investigations into the company’s affairs and potential returns from debtors and bad actors.
Creditors’ trusts require clear disclosure. The Report emphasises that ASIC expects key information to be clearly disclosed to creditors when a trust is used (e.g. the trustee’s role, trust costs, the treatment of claims and anticipated distribution timing) in compliance with the relevant legislation and ASIC guidance.¹⁵
Costs should be assessed against actual outcomes. Companies (and creditors) should bear in mind the likely costs of VA when weighing up the potential (usually significant) benefits of the process.

Questions to ask when assessing a proposed DOCA

Issue	Practical question
Funding certainty	Is the deed funding available now, dependent on future trading, or contingent on asset sales or third-party contributions?
Creditor outcome	How does the projected return compare with the likely liquidation return and what assumptions drive the comparison?
Related parties	Are related party claims excluded or subordinated? What is the practical effect on returns to unrelated creditors?
Investigations	Would the DOCA materially reduce the scope for investigations into the company’s financial affairs? Would this be in the creditors’ best interests?
Implementation risk	What are the consequences if the business underperforms or the deed fund is not met?

Conclusion

ASIC’s Report reinforces that VA and DOCA outcomes are highly fact dependent. The process can preserve company value and deliver better creditor outcomes, particularly in larger or more complex restructuring matters. However, creditors and appointees should closely examine the proposed DOCA structure, the source and certainty of funding, the treatment of related party claims, and whether the proposal provides a transparent and commercially defensible alternative to liquidation.

Contact us

Our Australian team has deep experience advising on all aspects of restructuring and insolvency law, including restructurings and workouts, formal insolvency processes, insolvency litigation, cross-border insolvencies and complex stakeholder engagements. You can find more information on our restructuring and insolvency practice here.

If you wish to discuss this article, or other questions of Australian restructuring and insolvency law, please contact the authors or your usual HFW contact(s).

Dasha Lin, Paralegal, assisted with research support during the preparation of this article.

Footnotes

Australian Securities and Investments Commission, Review of voluntary administration and deed of company arrangement process: 2021-2025 (Report No 836), published July 2026.
Ibid 3, 7, 9.
Ibid 7, 36.
Meaning that obligations under the DOCA had been fulfilled and all admissible debts or claims subject to the DOCA had been dealt with in accordance with the DOCA, pursuant to section 445F of Australia’s Corporations Act.
Ibid 7, 24, 36.
Ibid 24 – 25, 36, 40.
Ibid 4, 8, 37.
Ibid 4, 17.
Ibid 4 – 5, 20, 39.
Ibid 5 – 6, 8 – 9.
Ibid 17 – 8.
Ibid, 5, 12.
Ibid 28 – 9.
Ibid 30.
Ibid 5, 23; Part 5.3A of the Corporations Act; Regulatory Guide 82 External administration: Deeds of company arrangement involving a creditors’ trust.