Administrator vs Liquidator vs Small Business Restructuring Practitioner: Parts 1 & 2

Part 1: Administrator vs Liquidator: What Business Owners and Advisors Must Know

When Financial Distress Hits, Who Do You Turn To?

If your company is under financial pressure—cash flow problems, unpaid ATO debt, or creditor demands—you’re likely weighing your next move. Do you engage an administrator, a liquidator, or a small business restructuring practitioner?

Understanding the difference could be the key to saving your business or winding it up efficiently. This guide is written for directors, accountants, CFOs, and business lawyers seeking clarity on the roles, risks, and outcomes of administration vs liquidation.

What is an Administrator?

An administrator is a registered insolvency professional appointed to take control of a company that’s in financial distress but potentially still viable. Their goal is to assess whether the company can be rescued, sold, or should be wound up.

Key Responsibilities:

• Takes over control of the company from directors

• Investigates the business's financial position

• Works with creditors to propose a Deed of Company Arrangement (DOCA) or recommend liquidation

• Protects directors from insolvent trading claims during the administration period

  
  

Voluntary administration typically lasts 20–25 business days before creditors vote on the next steps.

What is a Liquidator?

A liquidator is appointed to wind up an insolvent company. Their role is to sell company assets, pay off creditors in priority order, and close the company permanently.

Key Responsibilities:

• Assumes full control of the company

• Investigates the company’s past conduct

• Realises all available assets and distributes proceeds to creditors

• Deregisters the company once all matters are finalised

Liquidation is not a rescue plan—it’s the end of the business.

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Key Differences: Administrator vs Liquidator

Feature	Administrator	Liquidator
Purpose	Assess rescue options	Close the company
Director Role	Removed from control	Removed from control
Outcome	DOCA, sale, or liquidation	Business shut down
Creditor Involvement	Vote on DOCA or liquidation	Receive asset proceeds
Trading During Process	Business may continue	Business ceases immediately

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When Should You Consider Administration?

Engaging an administrator may be appropriate if:

• Your business has temporary cash flow problems

• There’s a chance of restructuring via a DOCA

• You want legal protection from creditor enforcement (e.g., ATO, landlords)

Administration offers breathing space—but you must act early. Waiting too long may force liquidation.

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What Happens in Liquidation?

If your company is insolvent and has no viable future, liquidation might be necessary. It results in:

• Business closure

• Employee termination

• Loss of control by directors

• Possible personal exposure if misconduct is found

Learn more about director liability and DPN risk from ATO guidance.

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What About Small Business Restructuring?

For companies with debts under $1 million, the Small Business Restructuring (SBR) process offers a streamlined alternative. Directors stay in control while working with a Small Business Restructuring Practitioner (SBRP) to propose a formal payment plan.

This is covered in PART 2 below in our simplified breakdown ⬇️

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PART 2: Small Business Restructure vs Liquidation: What Business Owners Need to Know

When a business faces financial distress, owners and accountants must decide—should they restructure or wind up? Here's how SBR and liquidation compare.

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What is a Small Business Restructuring Practioner?

A Small Business Restructuring Practitioner (SBRP) helps businesses re-organise their debts and operations without losing control.

What They Do:

• Assess business viability

• Develop a debt restructuring plan

• Negotiate with creditors

• Help business owners stay operational

What is Small Business Restructuring?

SBR is a formal process designed for eligible small businesses. Directors remain in control while an SBRP facilitates a plan to repay creditors.

Eligibility Criteria:

• Total debts under $1 million

• Must continue trading during the process

• Up to date with tax lodgements

• Directors haven't used SBR in past 7 years

SBR is one of the only formal processes that allows owners to keep trading while managing insolvency.

What is a Liquidator?

A liquidator takes full control of the company when it is no longer viable. They sell off assets and close the company for good.

What They Do:

• Take over company operations

• Sell assets to repay creditors

• Investigate past conduct

• Finalise and deregister the company

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Restructure vs Liquidation: Side-by-Side

Feature	Small Business Restructure	Liquidation
Control	Directors stay in control	Liquidator assumes control
Outcome	Business survives	Business is shut down
Creditor Role	Vote on repayment plan	Paid from asset proceeds
Employee Status	Retained where possible	Terminated
Speed	35 business days total	Variable, often months

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FAQs

Can I choose liquidation even if SBR is available?

Yes, but it's worth exploring SBR if your business has a future.

Do employees stay employed under SBR?

Yes. Under SBR, the business keeps trading and staff are retained.

Can creditors reject an SBR plan?

Yes. They vote on whether to accept the plan. If rejected, liquidation may follow.

Is an administrator the same as an SBR practitioner?

No. Administrators take over control. SBRPs assist while directors stay in control.

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Final Thoughts: Choose the Right Path for Your Situation

Choosing between an administrator, SBR practitioner, or liquidator is a serious decision. Each path has implications for directors, employees, creditors, and the future of the business.

Not sure which option fits your business? Get tailored advice from a registered practitioner at TTJ Advisory.

Book your confidential consultation now.