Australian Restructuring and Insolvency Guide Series
Part 1 - General
Our ‘Australian Restructuring and Insolvency Guide’, is a practical resource when facing distressed situations, enforcement options and insolvency processes in Australia. It brings together the key legal principles and the commercial considerations that typically arise when matters move from stability to stress.
The guide is presented as a series of focused sections, each designed to stand alone as a practical reference for live matters.
While the series focuses on Australian law, it is also relevant to overseas practitioners and stakeholders dealing with Australian restructures, insolvencies, distressed investments, cross-border recovery, and creditor strategy.
Series roadmap
Across 13 parts, the series covers:
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Part 1 – General – (this article) |
Part 8 – Security |
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Part 2 – Types of liquidation and restructuring processes |
Part 9 – Clawback and related-party transactions |
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Part 3 – Insolvency tests and filing requirements |
Part 10 – Groups of companies |
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Part 4 – Directors and officers |
Part 11 – International cases |
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Part 5 – Matters arising in a liquidation or restructuring |
Part 12 – Quick reference |
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Part 6 – Creditor remedies |
Part 13 – Update and trends |
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Part 7 – Creditor involvement and proving claims |
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Part 1
Part 1 sets out the foundational framework that sits underneath everything else in Australian restructuring and insolvency.
Legislation
What main legislation is applicable to insolvencies and restructurings?
Corporate insolvency and restructuring in Australia are primarily governed by the Corporations Act 2001 (Cth), which sets out procedures for liquidation, voluntary administration, receivership and schemes of arrangement. The Bankruptcy Act 1966 (Cth) applies to personal insolvency. For cross-border matters, the Cross-Border Insolvency Act 2008 (Cth) incorporates the UNCITRAL Model Law on Cross-Border Insolvency and enables recognition of foreign
Excluded entities and excluded assets
What entities are excluded from customary insolvency or restructuring proceedings and what legislation applies to them? What assets are excluded or exempt from claims of creditors?
The Corporations Act 2001 (Cth) does not govern insolvency or restructuring proceedings for certain entities, including government departments, public authorities, and statutory corporations that are not companies for the purposes of section 9. These entities are typically governed by their own enabling legislation and are excluded from the external administration regimes under Part 5 of the Corporations Act 2001 (Cth). Aboriginal and Torres Strait Islander corporations are registered under the Corporations (Aboriginal and Torres Strait Islanders) Act 2006 (Cth). That Act has particular provisions that apply in relation to those corporations’ insolvency and restructuring needs.
Banks and insurers have their own insolvency provisions. Life insurance companies are regulated by the Life insurance Act 1995 (Cth). Similarly, banks (and other authorised deposit-making institutions (ADIs) are separately regulated under the Banking Act 1959 (Cth) by APRA.
There are also State-based insolvency regimes, largely in the not-for-profit sector, such as co-operatives and associations.
For individuals, the Bankruptcy Act 1966 (Cth) applies. That Act excludes certain assets from the bankrupt estate under section 116(2). These include properties held by the bankrupt in trust for another person, some of the bankrupt’s household properties and other items as listed under the statute.
For corporations, assets that are subject to a security interest may be exempt from unsecured creditors under the Corporations Act 2001 (Cth).
Public enterprises
What procedures are followed in the insolvency of a government-owned enterprise? What remedies do creditors of insolvent public enterprises have?
Government-owned enterprises are established under specific enabling legislation, which governs their restructuring and winding up. They are generally excluded from the insolvency procedures under the Corporations Act 2001 (Cth). The remedies available to creditors depend on the terms of the applicable statute.
Protection for large financial institutions
Has your country enacted legislation to deal with the financial difficulties of institutions that are considered ‘too big to fail’?
Yes. The Banking Act 1959 (Cth) gives the Australian Prudential Regulation Authority (APRA) wide powers to intervene in the affairs of authorised deposit-taking institutions (ADIs), including but not limited to making investigations, taking control of their business or appointing an administrator, where financial distress is likely. Prudential Standard CPS 190: Recovery and exit planning requires all APRA-regulated entities to prepare a ‘recovery and exit plan’ to minimise the risk of entity failure. APRA may also implement resolution plans under the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 (Cth).
Courts and appeals
What courts are involved? What are the rights of appeal from court orders? Does an appellant have an automatic right of appeal, or must it obtain permission? Is there a requirement to post security to proceed with an appeal? (If so, how is the amount determined?)
Corporate insolvency matters are generally heard in the Federal Court or state and territory supreme courts. Personal insolvency matters are generally heard in the Federal Court or the Federal Circuit and Family Court. An appeal from a final judgment may generally proceed as of right but leave is generally required for interlocutory orders. Security for costs may be ordered on application, with the amount and form determined by the court.
Next, Part 2
Part 2 moves from the framework to the pathways. It covers the core types of liquidation and restructuring processes, including the practical distinctions between liquidation, voluntary administration, receivership, and schemes of arrangement.
If you are dealing with financial distress, a solvency tipping point, a creditor enforcement decision, a cross-border recovery issue, or a time-critical court application, we can help you move quickly and defensibly. Our restructuring and insolvency work is designed to be commercial, evidence-disciplined, and aligned to the outcome that matters, whether that is preservation, control, recovery, or clean exit.
Further Information
For further information about Australian restructuring and insolvency, distressed situations, enforcement options and insolvency processes in Australia, please contact the author of this article:
