When a company goes into external administration — whether voluntary administration, liquidation, or a deed of company arrangement — directors, creditors, and other interested parties often feel powerless. The liquidator is in charge. What happens if you have genuine concerns about how the external administration is being conducted? In Australia, there is a formal mechanism that many directors and creditors have never heard of: the power of ASIC to appoint a reviewing liquidator.
In April 2026, ASIC issued new draft guidance clarifying exactly how this power works and who can use it. If your company is in external administration — or if you are a creditor with money on the line — this is something you need to understand.
What Is a Reviewing Liquidator?
A reviewing liquidator is a registered liquidator appointed by ASIC under the Corporations Act 2001 (Cth) to review the conduct of an external administrator of a company. “External administration” covers voluntary administration, liquidation, and administration under a deed of company arrangement (DOCA).
Think of a reviewing liquidator as an independent auditor of the external administration process. They do not replace the incumbent administrator or liquidator — they review whether that person is performing their role correctly and in compliance with the law.
What Can a Reviewing Liquidator Investigate?
According to ASIC’s April 2026 draft guidance, a reviewing liquidator can be appointed to examine:
- The external administrator’s general conduct of the administration
- The external administrator’s remuneration
- A particular transaction or decision made during the administration
- Whether the external administrator has complied with their statutory obligations
- Any matter specified by ASIC in the appointment
This is a powerful tool. Concerns about a liquidator undervaluing assets, failing to pursue preference claims, charging excessive remuneration, or inadequately investigating phoenix activity — all of these can be the subject of a reviewing liquidator’s investigation.
Who Can Apply to ASIC for a Reviewing Liquidator?
Not everyone can trigger this process. Under the draft ASIC guidance, the following people can apply:
- Any person with a financial interest in the external administration — this includes creditors (secured and unsecured), shareholders, guarantors, and related parties who stand to be financially affected by the outcome
- An officer of the company — including current and former directors
This is deliberately broad. A major creditor owed $500,000 by a company in liquidation has standing to apply. So does a director who believes the liquidator is conducting the administration in a manner that is commercially unreasonable or legally non-compliant.
How Does the Application Process Work?
Applications are made directly to ASIC in writing. ASIC’s draft guidance sets out the information that should accompany an application, including:
- Identification of the company and the current external administrator
- The applicant’s financial interest or officer status
- A clear description of the concerns that justify the appointment
- The specific matters the applicant wants reviewed
- Any relevant documentation supporting the concerns
ASIC has discretion whether to appoint a reviewing liquidator. It is not obliged to act on every application. In exercising that discretion, ASIC considers factors including the seriousness of the concerns raised, whether there are alternative remedies available, the costs involved, and whether the concerns relate to genuine misconduct or are being used as a tactic to disrupt the administration.
The ASIC guidance specifically flags that applications raising concerns about illegal phoenix activity will be taken seriously. This reflects ASIC’s well-documented enforcement focus on directors who strip assets from companies to avoid creditors before winding them up.
Who Pays for the Reviewing Liquidator?
Cost is a critical practical issue. The reviewing liquidator’s remuneration is typically met from the assets of the company under administration — which means it is ultimately borne by creditors. ASIC can also require the applicant to contribute to costs in certain circumstances.
This is an important consideration before making an application. If the company has limited assets, the reviewing liquidator’s costs could reduce the pool available for distribution to creditors — including you. Legal advice before applying is essential to make a proper cost-benefit assessment.
What Happens After a Reviewing Liquidator Is Appointed?
The reviewing liquidator conducts their investigation and prepares a report for ASIC. The external administrator must cooperate with the reviewing liquidator and provide access to books, records, and information. The external administrator cannot obstruct the review.
Depending on the findings, several outcomes are possible:
- ASIC may take regulatory action against the external administrator
- The reviewing liquidator’s findings may be used in Court proceedings to challenge the external administrator’s conduct or decisions
- The appointment may lead to the removal of the external administrator by a court
- In some cases, the findings may support a claim for compensation against the external administrator for loss caused by misconduct
The Relationship with Court Remedies
The reviewing liquidator power is one avenue for oversight — it is not the only one. Courts also have extensive powers under the Corporations Act to supervise external administrators, including the power to:
- Review and reduce excessive remuneration under ss 473A and 504
- Issue directions to a liquidator under s 479
- Terminate a winding up under s 482
- Remove a liquidator and appoint a replacement under s 503
In many situations, a court application will be more appropriate than an ASIC reviewing liquidator application — particularly where there is an urgent issue, a large sum of money at stake, or a clearly established legal ground for relief. The reviewing liquidator pathway is typically more appropriate for concerns about general conduct and compliance, while court proceedings are more appropriate for specific legal remedies.
Why Does This Matter for Creditors and Directors?
External administrations are not always conducted to the highest standard. Research consistently shows variability in the quality of insolvency practice in Australia. Creditors sometimes receive a fraction of what they are owed not because the company had no assets, but because the administration was poorly or improperly managed.
Directors facing insolvency need to understand the oversight mechanisms that can be used to scrutinise the administrator’s conduct. And creditors need to know that they are not powerless once a company goes into external administration — there are formal tools available to protect their position.
ASIC’s new guidance — currently in draft form — is designed to make these tools more accessible and transparent. When the guidance is finalised, it will provide clearer direction on how to engage with ASIC’s reviewing liquidator process.
Practical Steps if You Have Concerns
If you are a director or creditor with concerns about how an external administration is being conducted, consider the following steps:
- Document your concerns — Keep a written record of the specific conduct or decisions you are concerned about, including dates and relevant documents.
- Get legal advice early — The options available to you depend heavily on the specific facts. An experienced insolvency lawyer can assess whether a reviewing liquidator application, a court application, or another remedy is most appropriate in your circumstances.
- Consider the cost-benefit — Any formal action costs money. Your lawyer should help you assess whether the potential benefit justifies the expense, having regard to the assets available for distribution.
- Act promptly — Insolvency administrations move quickly. Delay can result in assets being distributed or the administration concluding before you have an opportunity to act. Do not wait until it is too late.
- Engage with the administrator’s reporting — External administrators are required to issue reports to creditors. Attend creditors’ meetings, read reports carefully, and ask questions at meetings. This creates a record of your engagement and may surface information supporting further action.
How Boss Lawyers Can Help
Boss Lawyers regularly acts in corporate insolvency matters on behalf of both creditors and directors. Our team has experience dealing with voluntary administrations, DOCAs, liquidations, and disputes involving external administrators. We understand how to assess concerns about an external administration, identify the most appropriate remedy, and pursue it effectively.
If you have concerns about the conduct of an external administration — whether you are a creditor who believes assets are being mismanaged, or a director who believes the administrator is not acting in the best interests of all stakeholders — we can help you understand your options and take action.
Contact Boss Lawyers on 1300 267 711 or use our online contact form to arrange a consultation.
This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances before taking any action in relation to an insolvency matter.
