Directors and the External Administrator

A Director's role and associated powers and duties will change upon the appointment of an External Administrator or Liquidator to a company.  Whilst a Director will lose control of the company, he/she will also get some breathing space and no longer have to deal with creditors pressing for payment.

The External Administrator will require the Director's assistance to gain information in relation to the company to assist the Administrator in understanding the history and affairs of the company and to enable the Administrator to carry out his/her duties and obligations to the company's creditors.

Director's Powers

A Director will no longer have control of the company after the appointment of a Voluntary Administrator or Liquidator.  If a company executes a Deed of Company Arrangement, the Director may regain his/her powers and full control of the company depending on the terms of the Deed.

Director's Obligations

A Director has an obligation not to obstruct the External Administrator in carrying out their duties and to assist the External Administrator by:

  • Advising the External Administrator of the location of company property and delivering any such property to the Administrator;
  •  Delivering to the Administrator the company's books and records;
  • Advising the Administrator of the location of other company books and records;
  • Providing the Administrator with a written report, known as a Report As To Affairs, about the company's business, property and financial circumstances:

Within 5 business days for voluntary administration

Within 7 business days for creditor's voluntary liquidation

Within 14 days for court liquidation and receivership

  • Meeting with, or reporting to, the External Administrator to help them with their enquiries, as reasonably required.

What to expect after the appointment of an External Administrator

The Administrator or Liquidator will take control of the company and, if the company is trading will quickly determine whether it is viable to continue to do so.

The Administrator or Liquidator will contact known creditors of the company to advise them of their appointment.  They will also advertise their appointment in either a newspaper circulated in the location of the business of the company, or on the ASIC Insolvency Notices website.

In the case of the appointment of a Voluntary Administrator, the Administrator is required to convene a first meeting of creditors within 8 business days after the appointment commences.

The Administrator will then conduct investigations into the affairs of the company to enable him/her to report to creditors on the business, property, affairs and financial circumstances and to form an opinion and recommendation to creditors as to the future of the company from the following options:

  • End the voluntary administration and return the company to the Director's control;
  • Execute a Deed of Company Arrangement through which the company will pay all or part of its debts and then be free of those debts;  or
  • Wind up the company and appoint a Liquidator.

The Administrator will convene a second meeting of creditors at which creditors vote on the future of the company.

In the event a Liquidator is appointed, the Liquidator has a duty to all creditors of the company and has the following roles:

  • Collect, protect and realise the company's assets;
  •  Investigate and report to creditors about the company's affairs;
  • Investigate the causes of the company's failure and report to ASIC;
  • Distribute any available funds after the costs of the administration and subject to the rights of secured creditors;  and
  • At the completion of the liquidation, apply for the deregistration of the company.


If your company is experiencing financial difficulty, it is vital to act promptly and obtain independent, professional advice about the best course of action in your circumstances.

As a Director you have the ability to appoint an External Administrator to take control of the company and to deal with creditors.  This allows the company some breathing space and takes the pressure off you as a Director.

Acting promptly will not only ensure you fulfil your duties as a Director but allow the greatest possible likelihood of being able to achieve a successful restructure and save the business and company.

Rodgers Reidy are highly specialised in dealing with insolvent companies and companies experiencing financial difficulty and have experience across a broad range of industries.  Contact Rodgers Reidy now for a confidential discussion in relation to your business circumstances.

Further resources:-

1. ASIC Information Sheet 42 – Insolvency: A guide for directors 

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