# Voluntary administration in Australia: how it works

> How voluntary administration works in Australia: creditors' meetings, DOCAs, small business restructuring, liquidation, safe harbour and the company's records.

Canonical: https://origindatapartners.com/guides/voluntary-administration-company-data-australia
By: Origin Data Partners
Status: Published
Published: 2026-11-05
Updated: 2026-11-05
Sources checked: 2026-11-05

## Quick answer

Voluntary administration is a short standstill for an Australian company that is insolvent or likely to become insolvent. The directors resolve to appoint a registered liquidator as voluntary administrator, who takes full control of the company and its property; while it lasts, unsecured creditors cannot enforce their claims and a creditor cannot act on a director's personal guarantee without the court's consent. The administrator holds a first creditors' meeting within 8 business days and a second meeting, usually about five weeks in, where creditors decide whether the company returns to the directors, enters a deed of company arrangement (DOCA), which must be signed within 15 business days, or goes into liquidation. A company with total liabilities of no more than $1 million can use small business restructuring instead and keep the directors in control. Directors must not let the company incur debts while insolvent, and safe harbour protects them only while they pursue a plan reasonably likely to lead to a better outcome and keep employee entitlements and tax lodgements up to date. Administrators and liquidators can sell company property, including its records, for creditors, subject to the Privacy Act.

## Key points

- Voluntary administration buys about five weeks: the administrator takes control, creditors are held off, then creditors choose between returning the company to its directors, a DOCA or liquidation.
- Safe harbour only protects directors who are pursuing a credible plan, paying employee entitlements, keeping tax lodgements up to date and handing over the books and reports an administrator needs.
- Books and records are company property. Keep them intact, deliver them to the administrator and check what they are worth before the appointment.

## Voluntary administration or liquidation: the director's checklist

Before you appoint a voluntary administrator or liquidator, check what the company's records are worth. AI developers now pay for the operational records of closing and insolvent companies, such as tickets, work orders, email and chat archives and code ([public deals](https://origindatapartners.com/guides/ai-data-licensing-deals)). Once an administrator takes control, those records are company property they can sell for creditors; knowing their value first means they are counted rather than deleted. A [free valuation](https://origindatapartners.com/check-fit) takes six questions about the business and no files.

The steps below are for directors of a company that cannot pay its debts when they fall due. The registered liquidator you appoint runs the formal process; what you do before and during the appointment affects what creditors recover and whether you keep your own protections. Each rule is sourced in the sections below.

| Step | What to do | Rule or deadline |
| --- | --- | --- |
| 1. Get advice early | Contact a registered liquidator, a specialist insolvency accountant or lawyer, or a financial advice service | As soon as you suspect the company cannot pay its debts when they are due |
| 2. Stop incurring debts | Before each new debt, ask whether there are reasonable grounds to suspect the company is or will become insolvent | Insolvent trading: civil penalties, compensation and, with dishonesty, criminal charges |
| 3. Decide whether there is a plan | Develop a course of action reasonably likely to lead to a better outcome than an immediate appointment, with qualified advice | Safe harbour needs employee entitlements paid and tax lodgements up to date |
| 4. Act on a director penalty notice | Pay, appoint an administrator or restructuring practitioner, or wind the company up | 21 days from the notice |
| 5. Choose the appointment | Small business restructuring, voluntary administration or liquidation | Restructuring needs total liabilities of no more than $1 million |
| 6. Keep the books intact | Do not delete systems, archives or accounts; list where every record is held | Directors must deliver the books and say where other books are |
| 7. Check the records' value | See whether operational records could be licensed, before the appointment | Proceeds are company money and go to creditors |
| 8. Appoint | A board resolution that the company is insolvent or likely to become so, after the registered liquidator's written consent to act | Administration begins on the appointment |
| 9. Hand over and report | Deliver the books and property; complete the report on company activities and property (ROCAP) | Within 5 business days in voluntary administration or a creditors' voluntary liquidation |
| 10. Attend and answer | Help the administrator with inquiries and attend creditors' meetings if required | First meeting within 8 business days; decision meeting about five weeks in |
| 11. Look after staff | Explain how entitlements are treated | The Fair Entitlements Guarantee applies only if the company goes into liquidation |

Source: [ASIC: Insolvency for directors (INFO 42)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)

## Voluntary administration vs liquidation vs restructuring: the options compared

The most common corporate insolvency procedures are liquidation, voluntary administration, receivership and small business restructuring ([business.gov.au](https://business.gov.au/exiting/bankruptcy-and-insolvency/insolvency-for-companies)). Restructuring and voluntary administration try to keep the company or its business going; liquidation winds the company up, after which it is deregistered and ceases to exist ([ARITA](https://arita.com.au/ARITA/ARITA/Insolvency_help/Insolvency_explained/My-company-cant-pay-its-bills.aspx)).

- The table draws on ASIC's guides to [small business restructuring](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/small-business-restructuring-and-the-restructuring-plan), [voluntary administration](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors), [liquidation](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors) and [insolvency for directors](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors).
- Solvent and simply closing? A members' voluntary liquidation or ASIC deregistration is covered in [how to close a company in Australia](https://origindatapartners.com/guides/close-a-company-australia).
- To see whether a company is in voluntary administration, check ASIC's Published notices website, where administrators must advertise creditors' meetings ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)).

|  | Who starts it | Who controls the company | How it ends | Key timing |
| --- | --- | --- | --- | --- |
| Small business restructuring | The directors resolve the company is insolvent or likely to become so, and appoint a restructuring practitioner | The directors, assisted by the restructuring practitioner | A plan accepted by a majority in value of affected creditors who respond; the company continues | 20 business days to prepare the plan; creditors usually have 15 business days to respond |
| Voluntary administration | Usually the directors; also a liquidator, or a secured creditor over all or substantially all the property | The voluntary administrator, who takes full control | Creditors choose: return to the directors, a DOCA or liquidation | First meeting within 8 business days; decision within 25 business days |
| Deed of company arrangement (DOCA) | Creditors vote for it; usually proposed by the directors or a third party | A deed administrator; directors' powers depend on the deed | The company pays all or part of its debts and is free of them; liquidation if the deed fails | Signed within 15 business days of the meeting |
| Creditors' voluntary liquidation | Shareholders resolve to liquidate, or creditors vote for it after an administration or a terminated DOCA | The liquidator | Assets sold, creditors paid, company deregistered | Information to creditors within 10 business days; report within 3 months |
| Simplified liquidation | A creditors' voluntary liquidation that meets the criteria | The liquidator | As above, with only one dividend to unsecured creditors | Liabilities under $1 million |
| Court liquidation | The court, usually on a creditor's application | A court-appointed liquidator | As above | Information to creditors within 20 business days |
| Receivership | A secured creditor, or the court | The receiver, over the secured property | Enough property sold to repay the secured creditor | Can run alongside an administration or liquidation |

Source: [ASIC: Voluntary administration, a guide for creditors (INFO 74)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)

## What is voluntary administration, and what happens to the company?

An independent registered liquidator, the voluntary administrator, takes full control of the company. That gives the directors or a third party time to find a way, if possible, to save the company or its business; if they cannot, the administrator aims for a better return to creditors than an immediate winding up ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)). Those are the two objects the law sets for administration ([Corporations Act section 435A](https://www.legislation.gov.au/C2004A00818/latest/text)).

Putting a company into voluntary administration is simple and quick. The directors resolve that the company is insolvent, or likely to become insolvent, and that an administrator should be appointed, having first obtained a registered liquidator's written consent to act ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)). ASIC keeps a register of registered liquidators.

- Control: the administrator has control of the company's business, property and affairs, may carry on the business, and may dispose of all or part of the business and any of its property ([section 437A](https://www.legislation.gov.au/C2004A00818/latest/text)). The directors lose control ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)).
- A standstill: unsecured creditors cannot begin, continue or enforce claims without the administrator's consent or the court's permission; owners and lessors of property the company uses cannot recover it, and secured creditors cannot enforce their security, except in limited circumstances; and nobody can apply to put the company into liquidation ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)).
- Personal guarantees: a creditor holding a director's personal guarantee cannot act on it without the court's consent while the administration lasts. A DOCA does not stop them afterwards.
- New costs: debts the administrator incurs for goods, services or property during the administration are paid from company assets, and the administrator is personally liable for them, so suppliers should get a purchase order authorised the way the administrator says.
- Property in use: within five business days of appointment, the administrator must tell owners of property the company uses whether they intend to keep using it.
- Fees: the administrator is entitled to be paid for necessary work properly performed, generally from available assets before any payment to creditors.

Source: [ASIC: Voluntary administration, a guide for creditors (INFO 74)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)

## The voluntary administration process: meetings and timeline

Two creditors' meetings must be held. The timetable below is ASIC's ([INFO 74](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)); the directors' duties come from the Corporations Act ([section 438B](https://www.legislation.gov.au/C2004A00818/latest/text)).

- The law behind the second meeting: a convening period of 20 business days, or 25 if the day after the administration begins is in December or less than 25 business days before Good Friday, with the meeting held within 5 business days before or after the period ends ([section 439A](https://www.legislation.gov.au/C2004A00818/latest/text)).
- Voting: resolutions pass on the voices or, if a poll is taken, by a majority in number and value: more than half the number of creditors voting, who are also owed more than half the total debt owed to creditors at the meeting. In a deadlock the chairperson has a casting vote. Lodge a proof of debt with the administrator to vote ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)).
- Returning the company to the directors is rare; when it happens, the directors are responsible for making sure it pays its debts as they fall due.

| Stage | What happens | Deadline |
| --- | --- | --- |
| Appointment | The administration begins and the administrator takes control | Day one |
| Directors' books and report | Directors deliver the books as soon as practicable, then a report about the company's business, property, affairs and financial circumstances | Report within 5 business days, or longer if the administrator allows |
| Property in use | The administrator tells owners whether the company will keep using their property | Within 5 business days |
| First creditors' meeting | Creditors can replace the administrator and form a committee of inspection | Within 8 business days; at least 5 business days' notice, advertised on ASIC's Published notices website |
| Report and statement | The administrator reports on the company and gives an opinion on each option, including any DOCA proposal and any voidable transactions a liquidator could recover | Sent at least 5 business days before the second meeting |
| Second creditors' meeting | Creditors decide the company's future | Within 25 business days of appointment, or 30 around Christmas or Easter; usually about five weeks in. The court can extend; creditors can adjourn for up to 45 business days |
| DOCA signed | The company signs the deed | Within 15 business days of the meeting, or the company goes into liquidation |
| Minutes | Lodged with ASIC | Within 10 business days of each meeting |

Source: [ASIC: Voluntary administration, a guide for creditors (INFO 74)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)

## Deed of company arrangement: what a DOCA does

A DOCA is a binding arrangement between the company and its creditors governing how the company's affairs will be dealt with. It is generally proposed by the directors or a third party, usually in consultation with the administrator, and run by a deed administrator, usually the registered liquidator who was the voluntary administrator ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)). The terms are flexible: typically the company pays all or part of its debts, possibly over time, is then free of them and often keeps trading.

- Who is bound: all unsecured creditors, even those who voted against it. Secured creditors, owners and lessors of property are bound if they voted for it, or if the court orders it.
- What it must say: who the deed administrator is, the property that will be used to pay creditors, the debts covered and how far they are released, the order of payment and when the deed ends.
- Timing: the company must sign within 15 business days of the meeting unless the court allows longer, or it automatically goes into liquidation with the administrator as liquidator. If the court later terminates the DOCA, the company also goes into liquidation.
- Directors' powers: depend on the deed's terms. When the DOCA is completed, the directors regain full control unless it provides for liquidation ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)).
- Employees: the DOCA must keep employees' priority over other unsecured creditors unless eligible employees agree, by a majority in number and value, to vary it. Employees of a company in voluntary administration or under a DOCA are not eligible for the Fair Entitlements Guarantee unless and until it goes into liquidation ([ASIC INFO 75](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-employees/voluntary-administration-a-guide-for-employees)).
- Records in a DOCA: if the company's records can be licensed, the fee is company property, and a DOCA proposal can direct it to creditors like any other asset.

Source: [ASIC: Voluntary administration, a guide for creditors (INFO 74)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)

## Small business restructuring: when the directors keep control

Small business restructuring lets an eligible company keep control of its business, property and affairs while it develops a plan with a restructuring practitioner, then put that plan to creditors ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/small-business-restructuring-and-the-restructuring-plan)). On the day the practitioner is appointed, total liabilities must not exceed $1 million, and the company must not have been through restructuring or a simplified liquidation in the previous seven years; similar limits apply to its directors' other companies.

- Before you appoint: the company cannot propose a plan unless it has paid the employee entitlements that are due and given the returns and other documents the tax laws require, or substantially done so. Tax debts do not need to be paid, only the returns given.
- Timeline: the proposal period generally lasts 20 business days and the practitioner can extend it by no more than 10. Creditors usually then have 15 business days, and the plan is accepted if a majority in value of the affected creditors who respond say yes.
- Limits: a plan cannot transfer property other than money to a creditor, or make payments on admissible claims more than three years after it is accepted.
- Public record: ASIC notes the appointment on the company register.
- Tax: appointing a small business restructuring practitioner is one of the ways to have a director penalty remitted ([ATO](https://www.ato.gov.au/individuals-and-families/paying-the-ato/if-you-don-t-pay/director-penalty-regime)).

Source: [ASIC: Small business restructuring and the restructuring plan](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/small-business-restructuring-and-the-restructuring-plan)

## Liquidation: creditors' voluntary, court and simplified

In liquidation an independent registered liquidator takes control of the company so its affairs can be wound up in an orderly and fair way for creditors ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors)). The most common type is a creditors' voluntary liquidation, which begins when an insolvent company's shareholders resolve to liquidate it and appoint a liquidator, or when creditors vote for liquidation after a voluntary administration or a terminated DOCA. In a court liquidation the court appoints the liquidator, usually on a creditor's application.

- What the liquidator does: protects, collects and sells the company's assets; investigates unfair preferences, uncommercial transactions, possible insolvent trading claims and creditor-defeating dispositions; reports possible offences to ASIC; and distributes the money after the costs of the liquidation, first to priority creditors, including employees, then to unsecured creditors.
- Reports: initial information to creditors within 10 business days of appointment in a creditors' voluntary liquidation, or 20 in a court liquidation, and a statutory report within three months.
- Simplified liquidation: a streamlined creditors' voluntary winding up for companies that meet the criteria, including liabilities of less than $1 million.
- Legal action: once the company is in liquidation, unsecured creditors cannot start or continue legal action against it unless the court permits.
- Employees who lose their job because the company went into liquidation may get help from the Australian Government through the Fair Entitlements Guarantee ([ASIC INFO 75](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-employees/voluntary-administration-a-guide-for-employees)).

Source: [ASIC: Liquidation, a guide for creditors (INFO 45)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors)

## Insolvent trading and safe harbour: what directors must do

If the company is insolvent, or there is a real risk it will be, directors' duties expand to include creditors. Before the company incurs a new debt, a director must consider whether there are reasonable grounds to suspect it is insolvent or will become insolvent by incurring it ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)). A director contravenes the duty if they are aware of such grounds, or a reasonable person in a like position would be ([section 588G](https://www.legislation.gov.au/C2004A00818/latest/text)).

- Safe harbour: a director may be protected from civil liability for insolvent trading if, after starting to suspect insolvency, they begin developing one or more courses of action reasonably likely to lead to a better outcome for the company than the immediate appointment of an administrator or liquidator, and the debt is incurred in connection with that course of action or in the ordinary course of business ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)). The protection ends if the course is not taken within a reasonable time, stops being taken or stops being reasonably likely to work, or when an administrator or liquidator is appointed ([section 588GA](https://www.legislation.gov.au/C2004A00818/latest/text)).
- What supports a plan: properly informing yourself of the company's financial position, preventing misconduct by officers or employees, keeping appropriate financial records, getting advice from an appropriately qualified adviser who has enough information, and developing or implementing a restructuring plan (section 588GA(2)).
- When it is not available: while the company is failing to pay employee entitlements that are payable, or to give returns and other documents required by tax laws, where the failure is less than substantial compliance or one of two or more in 12 months (section 588GA(4)).
- Records can cost you the protection afterwards. Safe harbour is treated as never having applied if the director then fails to substantially comply with duties to help an administrator or liquidator, including the report under section 438B(2) (section 588GA(5)). In ASIC's example, a director who withheld the books and records about her dealings with the company and left some sections of her ROCAP marked unknown was denied safe harbour ([RG 217](https://download.asic.gov.au/media/f4moc3we/rg217-published-6-december-2024.pdf)).
- Creditor-defeating dispositions: directors must also stop the company disposing of property for less than the lesser of its market value and the best price reasonably obtainable, where that keeps it from creditors in a winding up. Moving assets, data included, into another company without paying for them is what ASIC calls phoenix activity ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)).
- ASIC's detailed guidance is [RG 217](https://www.asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-217-duty-to-prevent-insolvent-trading-guide-for-directors).

| Consequence | What ASIC says can follow |
| --- | --- |
| Civil penalty | Up to the greater of 5,000 penalty units or three times the benefit obtained and detriment avoided |
| Compensation | Claims by ASIC, a liquidator or a creditor against the director personally; potentially unlimited and can lead to personal bankruptcy |
| Criminal charges, if dishonesty is involved | A fine of up to 2,000 penalty units, up to five years' imprisonment, or both |
| Poor records | A company that failed to keep adequate financial records is generally presumed insolvent throughout that period |

Source: [ASIC: Insolvency for directors (INFO 42)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)

## Director penalty notices and personal liability

Directors can become personally liable for the company's unpaid PAYG withholding, GST and super guarantee charge. The ATO must first give you a director penalty notice, and it can recover the penalty from you 21 days after issuing it ([ATO](https://www.ato.gov.au/individuals-and-families/paying-the-ato/if-you-don-t-pay/director-penalty-regime)). How you can have the penalty remitted depends on when the company reported the amounts:

- New directors are not liable for amounts due before their appointment if, within 30 days of joining, they make sure the company pays in full, appoints an administrator or restructuring practitioner, or is wound up.
- Other personal exposure: personal guarantees for business loans or credit lines ([AFSA](https://www.afsa.gov.au/i-cant-pay-my-debts/small-business-debt-options)), and debts incurred while the company traded insolvent, which can become personal if the company is liquidated, whether or not you gave a guarantee ([AFSA](https://www.afsa.gov.au/i-cant-pay-my-debts/bankruptcy/personal-bankruptcy-and-liquidation-company)).
- If you cannot pay personally, personal insolvency options such as bankruptcy may be needed, and your personal and business assets may be used to pay the debts ([AFSA](https://www.afsa.gov.au/i-cant-pay-my-debts/small-business-debt-options)). A bankrupt cannot continue as a company director, and their shares vest in the trustee ([AFSA](https://www.afsa.gov.au/i-cant-pay-my-debts/bankruptcy/personal-bankruptcy-and-liquidation-company)). The Small Business Debt Helpline is on 1800 413 828.

| The unpaid amount | How the penalty can be remitted |
| --- | --- |
| PAYG withholding or GST reported within 3 months of the due date | Within 21 days of the notice: the company pays in full, an administrator or a small business restructuring practitioner is appointed, or the company begins to be wound up |
| PAYG withholding or GST reported more than 3 months after the due date | Only by paying the company liability in full |
| Super guarantee charge reported by the SGC due date | The same four options, within 21 days of the notice |
| Super guarantee charge reported late or never | Only by paying the company liability in full |

Source: [ATO: Director penalties](https://www.ato.gov.au/individuals-and-families/paying-the-ato/if-you-don-t-pay/director-penalty-regime)

## What administrators and liquidators do with assets and records

Both can sell what the company owns. An administrator may dispose of all or part of the business and any of its property ([section 437A](https://www.legislation.gov.au/C2004A00818/latest/text)), which ASIC notes includes selling the business or individual assets before creditors decide the company's future ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)). A liquidator may sell or otherwise dispose of, in any manner, all or any part of the company's property ([section 477](https://www.legislation.gov.au/C2004A00818/latest/text)). Under the Act, property is any legal or equitable interest in real or personal property of any description, and the company's books include any other record of information ([section 9](https://www.legislation.gov.au/C2004A00818/latest/text)).

- Deliver the books: as soon as practicable after the administration begins, each director must deliver the company's books in their possession and, if they know where other books are, tell the administrator ([section 438B](https://www.legislation.gov.au/C2004A00818/latest/text)).
- Report: give the report on company activities and property within five business days in voluntary administration or a creditors' voluntary liquidation, or 10 business days in receivership or a court liquidation ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)).
- Property and meetings: tell the administrator where company property is, deliver what you hold, and meet or report to them as reasonably required.
- Do not obstruct: directors, officers and anyone else with relevant books and records must not obstruct an administrator or liquidator. Either can apply to the court for a public examination of a director under oath.
- Where the money goes: after the costs of the liquidation, including the liquidator's fees, subject to the rights of any secured creditor, to priority creditors such as employees, then to unsecured creditors ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors)).

Source: [ASIC: Insolvency for directors (INFO 42)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)

## Selling company data in an insolvency: the Privacy Act

Buyers pay for this kind of archive. As part of Spirit Airlines' US bankruptcy, the winning bid for the carrier's decades of data, including 100 million emails, 500 million Teams messages and 176,000 employee records, was $10 million, [MIT Technology Review reported](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/); it added that the proceeds of such sales typically flow to senior creditors and investors, not employees.

Personal information inside the records is the constraint. The OAIC says a business that sells assets, including personal information held in its customer database, is trading in personal information, and the Privacy Act covers any organisation trading in personal information ([OAIC](https://www.oaic.gov.au/privacy/privacy-guidance-for-organisations-and-government-agencies/organisations/selling-a-business)). That reaches small businesses the Act would not otherwise cover.

- Trading means collecting or disclosing personal information for a benefit, service or advantage. It is not trading if every individual concerned consents, or if the disclosure is authorised or required by law ([OAIC](https://www.oaic.gov.au/privacy/privacy-guidance-for-organisations-and-government-agencies/organisations/trading-in-personal-information)).
- The sale of a whole business, for example a sale of its shares where the personal information stays inside the business, is not trading in personal information.
- In due diligence a seller should consider whether information can be de-identified, and should avoid giving a prospective buyer customers' names and other identifiers ([OAIC](https://www.oaic.gov.au/privacy/privacy-guidance-for-organisations-and-government-agencies/organisations/selling-a-business)).
- Suppliers scrub personally identifiable information and exclude HR records before records are licensed, according to [MIT Technology Review](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/). See [the Privacy Act and licensing Australian company data](https://origindatapartners.com/guides/australia-privacy-act-ai-data-licensing) and [how to de-identify company data](https://origindatapartners.com/guides/de-identify-company-data-before-licensing).

Source: [OAIC: Selling a business](https://www.oaic.gov.au/privacy/privacy-guidance-for-organisations-and-government-agencies/organisations/selling-a-business)

## Before you delete company systems, check what the records are worth

A struggling company cancels subscriptions to save cash, and that deletes the email, chat, ticketing and code archives with them. In an Australian insolvency there are two more reasons to stop: directors must deliver the company's books to the administrator, and a director who then fails to help the administrator can lose safe harbour after the fact (see above).

Checking the value takes minutes: [see what your company's records are worth](https://origindatapartners.com/check-fit) from six questions about the business, before any system is switched off or an administrator is appointed.

- Retention: keep what the administrator needs to investigate the company and the directors' conduct, and anything tied to a dispute. The retention periods that apply after closing are in [how to close a company in Australia](https://origindatapartners.com/guides/close-a-company-australia).
- Value: operational records such as support tickets, work orders, email and chat archives and code repositories can be licensed to AI developers. AI labs are buying data from dead startups to train their models, [MIT Technology Review reported](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/) in October 2026.
- Timing: once appointed, the administrator decides what is sold and how. Tell them early that the records may have value, so the systems are kept long enough to be valued.
- Hands off: do not sell or copy the records yourself on the way into administration. A sale below market value that keeps property from creditors is a creditor-defeating disposition.


## How directors can help the administrator get value for the records

The administrator investigates the company's business, property and affairs in a few weeks ([ASIC](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)) and usually knows little about its systems at the start. Directors can close that gap while doing what the law requires anyway ([section 438B](https://www.legislation.gov.au/C2004A00818/latest/text)).

- List the systems: each tool, what it holds, the years covered and the approximate volume, plus the admin accounts and who holds the logins. The [data inventory template](https://origindatapartners.com/blog/company-data-inventory-template) gives the columns.
- Say where the records are, including cloud services and archives held by suppliers: the duty to tell the administrator where books are kept covers books you do not hold yourself.
- Include the records in the ROCAP's account of company property, so they are not overlooked.
- Flag the personal information: which archives hold customer or staff details and what the privacy policy told people, because that decides whether the records can be traded and on what terms.
- Flag the contracts: customer agreements or software terms that limit how data can be used or transferred.

Source: [Corporations Act 2001 (Cth), sections 9, 435A, 437A, 438B, 439A, 444B, 477, 588G and 588GA (legislation.gov.au)](https://www.legislation.gov.au/C2004A00818/latest/text)

## How to keep that option open

Before the appointment, keep admin access, stop any automatic deletion and describe what you hold at company level: the systems, years covered and approximate volume. The [deals tracker](https://origindatapartners.com/guides/ai-data-licensing-deals) lists public prices as reported.

Money from licensing records is company money like any other sale proceeds, so in an administration or liquidation it goes to creditors before members. For the Australian market see [selling company data in Australia](https://origindatapartners.com/sell-company-data/australia); for timing, [selling company data after closing](https://origindatapartners.com/guides/sell-company-data-after-closing) and [how Origin helps companies winding down](https://origindatapartners.com/who-we-help/companies-winding-down). Closing a solvent company? Use the [Australian closing checklist](https://origindatapartners.com/guides/close-a-company-australia).


## Next step

Start with advice from a registered liquidator and one list of every creditor, employee, asset and system. If the company holds years of tickets, work orders, chat or code, describe them before anything is switched off or an administrator is appointed; no export is needed to find out whether they are worth licensing.

This guide is general information about Australian insolvency law, not legal or financial advice. Get advice on your own company before you act.

Origin Data Partners is independent and is not affiliated with any AI data buyer. We help owners compare buyers and find the best fit for their records. [See what your data is worth](https://origindatapartners.com/check-fit).


## Questions and answers

### What is voluntary administration?

A formal process in which an independent registered liquidator, the voluntary administrator, takes full control of an insolvent company to see whether it or its business can be saved, or whether creditors can get a better return than in an immediate winding up. The directors usually appoint the administrator after resolving that the company is insolvent or likely to become insolvent. Creditors then decide whether the company returns to the directors, enters a deed of company arrangement or goes into liquidation.

### How long does voluntary administration take?

Usually about five weeks to the decision. The first creditors' meeting must be held within 8 business days of the appointment, and the meeting to decide the company's future within 25 business days, or 30 around Christmas or Easter, unless the court extends it; creditors can also adjourn it for up to 45 business days. If creditors choose a DOCA, the company must sign it within 15 business days.

### What is the difference between voluntary administration and liquidation?

Voluntary administration is a temporary standstill that tries to save the company or its business, and ends with creditors choosing between returning the company to the directors, a deed of company arrangement or liquidation. Liquidation winds the company up: the liquidator sells its assets, investigates, pays creditors in the order the law sets and the company is deregistered. A creditors' voluntary liquidation can also follow an administration, when creditors vote for it.

### What is a deed of company arrangement?

A binding agreement between a company and its creditors, approved at the second creditors' meeting, that sets out how the company's affairs will be dealt with. Typically the company pays all or part of its debts, possibly over time, is then free of them and keeps trading. It binds all unsecured creditors, even those who voted against it, but does not stop a creditor enforcing a director's personal guarantee.

### What is safe harbour for directors?

A protection from civil liability for insolvent trading. It applies to debts incurred in connection with a course of action that is reasonably likely to lead to a better outcome for the company than appointing an administrator or liquidator straight away, or in the ordinary course of business. It is not available while the company is failing to pay employee entitlements or to lodge tax returns, and it can be lost if the director does not help a later administrator or liquidator.

### What happens to employees when a company goes into voluntary administration?

Employees are a special class of unsecured creditor whose entitlements are usually paid before other unsecured creditors. The administrator has the power to keep the business trading, sell it or close it. Employees are not eligible for the Fair Entitlements Guarantee while the company is in voluntary administration or under a DOCA, only if it goes into liquidation, and a DOCA can change their priority only if eligible employees agree by a majority in number and value.

### What should I do if I get a director penalty notice?

Get professional advice straight away. The ATO can recover the penalty from you personally 21 days after issuing the notice. If the PAYG withholding or GST was reported within 3 months of the due date, or the super guarantee charge by its due date, you can have the penalty remitted within those 21 days by having the company pay in full, appointing an administrator or a small business restructuring practitioner, or winding the company up. Otherwise only payment in full remits it.

### Can an administrator or liquidator sell company data?

Yes. Under the Corporations Act a company's books include any record of information, and administrators and liquidators can sell company property. Personal information inside the records is the constraint: the OAIC treats selling assets that include a customer database as trading in personal information, which brings the Privacy Act into play even for small businesses, so de-identified records or individuals' consent are usually needed.

## Sources

- [ASIC: Voluntary administration, a guide for creditors (INFO 74)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors)
- [ASIC: Voluntary administration, a guide for employees (INFO 75)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-employees/voluntary-administration-a-guide-for-employees)
- [ASIC: Insolvency for directors (INFO 42)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors)
- [ASIC: Liquidation, a guide for creditors (INFO 45)](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/liquidation-a-guide-for-creditors)
- [ASIC: Small business restructuring and the restructuring plan](https://www.asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/small-business-restructuring-and-the-restructuring-plan)
- [ASIC: RG 217 Duty to prevent insolvent trading, guide for directors (Dec 2024)](https://www.asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-217-duty-to-prevent-insolvent-trading-guide-for-directors)
- [ASIC: RG 217 (PDF), including Example 10 on safe harbour and records](https://download.asic.gov.au/media/f4moc3we/rg217-published-6-december-2024.pdf)
- [Corporations Act 2001 (Cth), sections 9, 435A, 437A, 438B, 439A, 444B, 477, 588G and 588GA (legislation.gov.au)](https://www.legislation.gov.au/C2004A00818/latest/text)
- [ATO: Director penalties](https://www.ato.gov.au/individuals-and-families/paying-the-ato/if-you-don-t-pay/director-penalty-regime)
- [AFSA: Small business debt options](https://www.afsa.gov.au/i-cant-pay-my-debts/small-business-debt-options)
- [AFSA: Personal bankruptcy and the liquidation of a company](https://www.afsa.gov.au/i-cant-pay-my-debts/bankruptcy/personal-bankruptcy-and-liquidation-company)
- [business.gov.au: Insolvency for companies](https://business.gov.au/exiting/bankruptcy-and-insolvency/insolvency-for-companies)
- [ARITA: My company can't pay its bills](https://arita.com.au/ARITA/ARITA/Insolvency_help/Insolvency_explained/My-company-cant-pay-its-bills.aspx)
- [OAIC: Selling a business](https://www.oaic.gov.au/privacy/privacy-guidance-for-organisations-and-government-agencies/organisations/selling-a-business)
- [OAIC: Trading in personal information](https://www.oaic.gov.au/privacy/privacy-guidance-for-organisations-and-government-agencies/organisations/trading-in-personal-information)
- [MIT Technology Review: AI labs buying data from dead startups (Oct 2026)](https://www.technologyreview.com/2026/10/13/1145755/ai-labs-buying-data-from-dead-startups-to-train-models/)

## Related reading

- [How to close a company in Australia: ASIC deregistration](https://origindatapartners.com/guides/close-a-company-australia)
- [/sell-company-data/australia](https://origindatapartners.com/sell-company-data/australia)
- [Can an Australian business license its data to AI companies?](https://origindatapartners.com/guides/australia-privacy-act-ai-data-licensing)
- [Closing a software business: what could have value beyond the code?](https://origindatapartners.com/guides/sell-company-data-after-closing)
- [/who-we-help/companies-winding-down](https://origindatapartners.com/who-we-help/companies-winding-down)