How does external administration or receivership affect me as a director?

As well as the possibility of insolvent trading action, there are other consequences for directors of a company that goes into external administration or where a receiver is appointed. These vary depending on the type of external administration.

Directors’ powers

Directors of companies in voluntary administration or liquidation lose control of the company. If a company goes from voluntary administration into a deed of company arrangement, the powers of the directors depend on the deed’s terms. When the deed is completed, the directors regain full control unless the deed provides for the company to go into liquidation on completion.

In a receivership, the powers of the directors depend on the powers of the receiver, as detailed in the security document, and the extent of the assets over which the receiver is appointed. If the receiver is appointed over all or most of the assets of a company, the receiver effectively has control, although the directors still have certain responsibilities and duties, and may retain residual control.

Directors’ obligations

Directors have certain obligations to assist the external administrator or receiver. For further information go to What is my role in assisting an external administrator or receiver?

Creditors’ meetings

Meetings of creditors are held in voluntary administrations and liquidations.

Both a voluntary administrator and liquidator can also require a director to attend a creditors’ meeting to provide information about the company and its business, property, affairs and financial circumstances.


If a director has been involved with two or more companies that have gone into liquidation within the last 7 years and paid their creditors less than 50 cents in the dollar, ASIC may disqualify them from managing corporations for up to five years. This effectively bans a person from acting as a director.

ASIC can also apply for orders disqualifying a person from managing corporations for up to 20 years if they have been an officer of two or more companies that have failed within the last 7 years, and the way in which the companies were managed contributed to the failures.

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Last updated: 15/10/2018 04:12