An extraordinarily high number of businesses fail, and if yours has as well – we are sorry to hear that, losing your business can be a very painful process. The following are your options when your business fails.

Can you trade your way out of it?

Try and strike a deal with your creditors if you can.  Things may not be as dire as you think.

If that doesn’t work …

Then you should seek professional advice – don’t delay in making a decision.  If it becomes clear things are going from bad to awful, then stop trading and speak to a professional.

Trying to save your business is certainly better, but this may involve stopping trading until things get cleared up.  Of course stopping trading doesn’t mean you are winding-up the business, it just means you are taking time to try to work out the best solution.

There are a number of steps you can take if it appears you are heading towards insolvency, so you can relieve pressure from your creditors. You may need to:

  • Reorganise your business
  • Sell some assets
  • Reduce your costs
  • Put more energy into the areas of your business which are making money
  • Identifying growth areas for your business
  • Improve your debt management
  • Get an entirely new outlook on your business by hiring multiple professionals

You can get into serious legal trouble if you fail to manage this process quickly as many businesses are bound by strict laws under the Corporations Act.  You should definitely consider speaking with a business lawyer or getting online legal advice if your business is going broke.

You will also need to understand the differences with these concepts:

  • External administration
  • Voluntary administration
  • Receivership
  • Liquidation
  • Informal rescue

What is External Administration?

External administration is a broad term used to describe insolvency arrangements – it is the umbrella description for a person who may also be known as a:

  • Voluntary administrator
  • Liquidator
  • Insolvency practitioner
  • Receiver

What is Voluntary Administration?

Voluntary administration means an external administrator comes in and takes control of the company.  The administrator will take all responsibility for trading and decision making.  The administrator will investigate the state of the company and make a formal recommendation about whether or not it should continue.

Your business is protected from legal action during this time and the administrator may be able to bring the company back to profitability.

What is Liquidation?

This often follows after a negative assessment from an administrator.  A liquidator will wind the business up and sell all the assets to pay off its debts.

What is Receivership?

Receivership could be described as being half-way between liquidation and voluntary administration.  A receiver is appointed by a secured creditor to sell a company’s assets to pay off the company’s debts.  The business can still operate if it is able to after the receiver has sold off the assets it needed to pay off the debts.


If you have further questions, consider speaking to a business lawyer or getting online legal advice.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Lachlan McKnight
Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at

View Privacy Policy