Quick answer
In Australian business finance, an administrator is an independent registered liquidator appointed to take control of a company in voluntary administration. They run the business in the short term, investigate its affairs and recommend to creditors whether it should enter a deed of company arrangement, go back to the directors or be wound up. Directors, a major secured creditor or a liquidator can make the appointment.
Key points
- Must be a registered liquidator and independent of the company
- Appointed by directors, a secured creditor over most of the assets, or a liquidator
- Takes over the directors' powers and can trade on or sell the business
- Paid from company assets, but fees must be approved by creditors or the court
When a company is placed into voluntary administration, the directors step aside and one person takes the wheel: the administrator. Their job is to stabilise the business, find out what went wrong and give creditors an honest recommendation about the company’s future, all within a few weeks.
The process itself is covered on our voluntary administration page. This one focuses on the person: who they are, what they can do, and how to deal with them if you’re a director, a creditor or a guarantor.
Who can be an administrator?
Only a registered liquidator, a qualified insolvency professional registered with ASIC. They must be independent. Before the first creditors’ meeting they send creditors declarations covering any relationships with the company, its directors or major creditors, and any indemnities they’ve received. That disclosure exists because directors usually choose the administrator, and creditors need to be able to trust that the recommendation isn’t tilted towards the people who appointed them.
Who appoints one?
| Appointed by | Typical situation |
|---|---|
| The directors | The board resolves in writing that the company is, or is likely to become, insolvent |
| A secured creditor | A lender holding a general security agreement over all or substantially all of the company’s property |
| A liquidator or provisional liquidator | An existing liquidator sees a better outcome through administration |
Directors are by far the most common appointers. Appointing early, rather than waiting for a creditor to apply to wind the company up, tends to leave more on the table.
What can an administrator do?
From the moment of appointment, the administrator holds the powers of the company and its directors. In practice that means they can:
- Keep trading the business, or shut down loss-making parts of it
- Sell the business or individual assets, even before creditors vote
- Deal with employees, landlords and suppliers on the company’s behalf
- Investigate past transactions and report possible offences to ASIC
- Recommend one of three outcomes: a deed of company arrangement, returning the company to the directors, or liquidation
Directors don’t vanish. They must hand over books and records, give the administrator a report on the company’s affairs, and they’re often central to any rescue deal. But they no longer make the decisions.
How do administrators get paid?
Their fees come out of the company’s assets ahead of unsecured creditors, so they affect what everyone else receives. Future fees must be approved by creditors, a committee of inspection or the court, and the administrator has to provide a plain-language report estimating the work involved and total cost. Creditors, the administrator or ASIC can ask the court to review fees. Where the company has very little left, the costs can absorb most of it, which is another reason early appointments often go better.
Administrator, receiver, liquidator or restructuring practitioner?
The roles get muddled, but they answer different questions. An administrator decides what happens to the company. A receiver acts mainly for the secured creditor who appointed them. A liquidator winds the company up. A small business restructuring practitioner advises while the directors stay in control. Our page on insolvency lays out when each one comes into play.
What it means for lenders and guarantors
For a lender, the appointment brings a freeze. Most creditors, secured ones included, can’t enforce their claims without the administrator’s consent or court permission, and a guarantee can’t be called on during the administration without the court’s leave. A lender with security over all or substantially all of the company’s assets has a short window to act itself.
For a director who has given a personal guarantee, that pause is temporary. Once the administration ends, the lender can pursue the guarantee for any shortfall. Directors who want to keep the business sometimes fund a deed proposal using equity in their own property, and if that’s on your mind, talk to us before the second creditors’ meeting.
An illustrative scenario
Here’s an illustrative case. A Darwin hospitality group with three venues falls behind on rent and tax after a slow wet season. The directors appoint an administrator. Within the first week, the administrator closes the weakest venue, keeps the two profitable ones trading and talks to the bank holding the group’s security. One director offers a deed funded partly by a loan against a family-owned investment unit. The administrator’s report recommends the deed as the better outcome for creditors than liquidation, and creditors vote in favour.
Related terms
- Voluntary administration: the process the administrator runs
- Secured creditor: lenders with security and their limited right to act
- Liquidation: the outcome if the company can’t be saved
- Insolvency: the financial position that usually leads to an appointment
Looking for funding during or after an administration?
Whether you’re trying to fund a deed of company arrangement or rebuild once an administration has ended, the realistic options usually depend on property security and a clear plan. We talk with directors in this position often and won’t pretend it’s simple.
Starting an enquiry takes about a minute. Your credit file isn’t touched just for asking, and your details come to us alone, not out to a crowd of lenders. Someone here takes in the full story and calls you to talk it through. Tell us plainly where the administration is up to, so we can point you to a lender that will actually consider it.
Frequently asked questions
Who appoints an administrator?
Usually the directors, by a written board resolution once they believe the company is or will become insolvent. A secured creditor with security over all or substantially all of the company's property can also appoint one, as can a liquidator or provisional liquidator.
Can creditors replace the administrator?
Yes. At the first creditors' meeting, held within eight business days of the appointment, creditors can vote to replace the administrator with a registered liquidator of their choice, who must also make declarations about independence.
What is the difference between an administrator and a receiver?
An administrator acts for the benefit of creditors as a whole and decides how the company's future should be resolved. A receiver is appointed by a secured creditor, or sometimes by the court, mainly to recover that creditor's debt from the assets covered by its security.
Does the administrator pay my company's debts?
No. The administrator isn't personally responsible for debts the company incurred before the appointment. They are, however, generally personally liable for certain debts they incur during the administration, such as for goods and services ordered while trading on.
Does administrator mean something else in finance?
Sometimes. In estates, the administrator manages a deceased person's assets when there's no valid will or executor. Some loan agreements also name a loan administrator or agent. In business lending, though, the word almost always refers to a voluntary administrator.