PKF Australia

Accountants and Business Advisers

Insolvency Types

Insolvency Types

Following are the different insolvency types that may be applicable when a financially troubled company is insolvent or seeking to liquidate company assets. It is recommended that you seek the advice of a qualified insolvency practitioner as early as possible before determining the most suitable course of action for your business.

Voluntary Administration

Voluntary administration occurs when an insolvency practitioner is appointed by the Board to manage the investigation into a financially troubled company's affairs and report and make recommendations to creditors. The insolvency practitioner can be appointed by the company directors or a secured creditor. There are three alternative options that an appointed administrator can recommend to creditors – enter into a deed of company arrangement, put the company into liquidation or return the company to the directors.

Creditors Voluntary Liquidation

This is a type of insolvency initiated by the company. Creditors Voluntary Liquidation arises when an insolvent company selects an insolvency practitioner to liquidate the company on its behalf.

Members Voluntary Liquidation

This is a form of liquidation that is undertaken by a solvent company to liquidate the company's assets. Members Voluntary Liquidation may occur when company owners no longer need the company due to a sale of the business, retirement, changes in economic or environmental factors or group re-organisation. To be able to qualify for a Members Voluntary Liquidation, company directors must be able to confirm that the company's financial obligations can be met 12 months.

Provisional Liquidation

The appointment of a Provisional Liquidator in the form of a insolvency practitioner can occur when there is dispute between a company's shareholders, an insolvent company urgently needs an administrator appointed or the value of a company's assets are likely to be greatly decreased.


Receiverships occur when a secured creditor or court puts a company under the governance of an independent insolvency practitioner to control part or all of a company's assets.

Court Liquidation

Court liquidation occurs when a court appoints an independent liquidator to be responsible for the liquidation of a company's assets. This is usually due to a company failing to meet an unsecured creditor’s statutory demand.

Informal Workout/Turnaround

When administration, receivership or liquidation is not appropriate directors may require the assistance of an independent insolvency accountant to provide advice on resolving their financial situation.

If you would like to discuss our specialist Business Recovery and Insolvency services and how we might be able to assist you, please phone our Sydney office (02) 8346 6000, Melbourne office (03) 9679 2222, Adelaide (08) 8373 5588 or Newcastle office on (02) 4962 2688.

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