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:
Part 1 – General | Part 8 – Security |
Part 2 – Types of liquidation and restructuring processes | Part 9 – Clawback and related-party transactions |
Part 3 – Insolvency tests and filing requirements | Part 10 – Groups of companies |
Part 4 – Directors and officers | Part 11 – International cases |
Part 5 – Matters arising in a liquidation or restructuring | Part 12 – Quick reference |
Part 6 – Creditor remedies – (this article) | Part 13 – Update and trends |
Part 7 – Creditor involvement and proving claims |
Part 6
Part 6 examines the remedies available to creditors. It covers secured creditors’ enforcement rights outside court proceedings, the appointment of receivers, debt recovery and enforcement by unsecured creditors, freezing orders, statutory moratoria, and security for costs for foreign creditors.
Creditor remedies
Creditors’ enforcement
- Are there processes by which some or all of the assets of a business may be seized outside of court proceedings? How are these processes carried out?
Yes. The main way a secured creditor may enforce its security interests without court proceedings is by appointing a receiver under a security agreement, once the security becomes enforceable, to manage the company’s business affairs and realise relevant assets primarily for its benefit. Although secured parties’ rights to appoint receivers is not contingent on having perfected interests under the Personal Property Securities Act 2009 (Cth), if left unperfected by the timeframe as specified in the statute, the security may be lost and vest in the company upon liquidation or voluntary administration.
Unsecured credit
- What remedies are available to unsecured creditors (eg, seizures, attachments, judgments)? Are the processes difficult or time-consuming? Are pre-judgment attachments available?
An unsecured creditor may commence court proceedings to recover debts. Courts may grant freezing orders to prevent dissipation of assets before final judgment where there is a real risk of frustration of enforcement. Default judgment is available where no defence is filed, after which the creditor may pursue enforcement actions or issue a statutory demand under section 459E of the Corporations Act 2001 (Cth), potentially leading to winding up.
However, once the company is placed into liquidation or voluntary administration, unsecured creditors are generally subject to statutory moratoria, restricting proceedings or enforcement actions against the company or its property without leave of the court or the liquidator or administrator’s written consent.
Foreign creditors may be required to provide security for costs, especially if they are not resident in Australia.
Next, Part 7
Part 7 examines creditor involvement and proving claims in a liquidation or reorganisation. It covers creditor participation and representation, funding and assignment of claims, proofs of debt and appeals, set-off, creditor priorities, employee entitlements, environmental liabilities, liabilities that survive insolvency, and distributions to creditors.
If you are a creditor, director, insolvency practitioner or adviser navigating a formal insolvency or restructuring process, decisions around enforcement, creditor participation, proving claims and priority rights can materially affect value and recovery. We can help assess available remedies, navigate stays and moratoria, pursue or challenge claims, protect secured and unsecured creditor rights, and resolve disputes as they arise. Our restructuring and insolvency work is designed to be commercial, evidence-disciplined, and focused on preserving value, protecting stakeholder interests, and achieving the best available outcome.
If you are a creditor, director, insolvency practitioner or adviser navigating a formal insolvency or restructuring process, decisions around enforcement, continued trading, funding, asset sales and contractual rights can materially affect value and recovery. We can help assess available options, navigate stays and moratoria, manage post-appointment transactions, protect contractual and proprietary rights, and resolve disputes as they arise. Our restructuring and insolvency work is designed to be commercial, evidence-disciplined, and focused on preserving value, protecting stakeholder interests, and achieving the best available outcome.
Further Information
For further information about secured creditor enforcement, unsecured debt recovery, or protecting creditor rights during insolvency, please contact the author of this article:
