WHY DOES IT TAKE SO LONG?
CLAIMCLOUD explores some of the reasons why Australian insolvencies can drag on for years
Creditors in Australian insolvencies may be surprised by how long a complex insolvency takes to reach its conclusion, and for unsecured creditors to (hopefully) receive a final dividend or distribution.
Occasionally an insolvency will be a streamlined process, with a party proposing a Deed of Company Arrangement that is recommended by the Administrator(s) and accepted by creditors five weeks after the appointment.
Where the insolvent company is a large or complex Australian entity however, a fair assumption for a creditor who is owed money is that it is likely to take multiple years before the insolvency is finalised.
The median period for a corporate winding up based on a sample of 416 insolvencies between 2008 and 2018 was 2 years (the average was a little over 3 years)*. This is broadly consistent with insolvencies that ClaimCloud has recently been participating in.
ClaimCloud’s offering to creditors is designed with an acute awareness of how long complex Australian insolvencies take: we will buy an assignment of your claim, so you receive a payment now and can get back to doing what you are great at.
An incomplete selection of factors that extend the timeframes of Australian insolvencies is outlined below, along with some examples of insolvencies where ClaimCloud has had dealings with creditors:
Litigation – administrators and liquidators of Australian companies can find themselves on both sides of legal proceedings. Most commonly, creditors will expect insolvency practitioners to consider commencing legal proceedings against parties that may have wronged the insolvent company or its creditors. This may include initiating proceedings to recover unfair preference payments paid to creditors within 6 months of the insolvency, or perhaps and insolvent trading claim against the directors of the company. Examples include:
Babcock & Brown Limited liquidation – administrators were appointed to the formerly ASX-listed company in Mar 2009. It has now been more than 16 years, and the liquidator cannot yet distribute funds to creditors because of 7 highly similar legal proceedings (not counting appeals) launched by Babcock & Brown Ltd shareholders who are seeking damages for insufficient ASX disclosures and for those claims to be admitted as unsecured creditor claims in the liquidation
University Co-Operative Bookshop Limited liquidation – administrators were appointed in Nov 2019 and traded the business for a short period before creditors voted to appoint the administrators as liquidators in Mar 2020. The liquidators have since been pursuing the recovery of preference payments made to suppliers, making substantial recoveries over an almost 3-year period to Feb 2025. The legal proceeding regarding insolvent trading has not yet (as at Aug 2025) reached a NSW Supreme Court hearing.
Collecting illiquid assets – insolvency practitioners are expected to find a balance between a) harvesting 100% of an insolvent company’s assets and b) providing a timely dividend to creditors. The collection of illiquid assets (oftentimes debtors / receivables) means that creditors are likely to face an extended wait. Additionally, time is often lost due to the administrator / liquidator needing to learn the minutiae of the underlying illiquid assets. Examples include:
Enova Energy Pty Ltd / Enova Community Energy administrations – administrators were appointed to Enova Energy Pty Ltd, an Australian electricity retailer, in Jun 2022. An interim distribution was paid to creditors in May 2024. The insolvencies are ongoing as at Aug 2025. A severe difficulty for the administrators is the fact that all of Enova Energy’s customers were automatically transferred to other electricity providers on the appointment date, diminishing the connection between retailer and customer, and therefore collectability. A debtor book of $4.7m is still being collected by the administrators on behalf of creditors more than 3 years later.
Competing responsibilities of insolvency practitioners – creditors should realise that the insolvency practitioners that are appointed as administrators, liquidators or creditors’ trustees are almost always managing multiple simultaneous appointments. Their ability to progress each insolvency under their management is influenced by the number and complexity of matters that they are responsible for, noting that the most urgent issue will be dealt with first. It is natural that insolvencies move slower during a period of elevated insolvencies such as Australia has experienced since 2023.
Creditors’ trusts – there is no data available on the average duration of creditors’ trusts. This structure for dealing with an insolvency is seemingly popular where creditors are to receive the benefit of asset sales in scenarios where those assets are illiquid and will take an extended period of time to sell. Unfortunately for creditors whose claims are transferred to beneficiary claims against a creditors’ trust, there are fewer rights and protections available as compared to a liquidation. There is very little for a creditor (now a beneficiary) to do but sit and wait for updates from the insolvency practitioner, who is now acting in the capacity of the trustee of the creditors’ trust. Examples include:
Digital Surge Creditors’ Trust – administrators from KordaMentha were appointed to the crypto exchange Digital Surge Pty Ltd in Dec 2022 following the directors’ doomed decision to place approximately half of its customers’ cryptocurrency assets with FTX shortly before FTX’s bankruptcy. A creditors’ trust was established in Feb 2023. Creditors of Digital Surge Pty Ltd currently (Aug 2025) remain beneficiaries of the trust as the trustees deal with asset collections and defend litigation
WBHOI Creditors’ Trust – administrators from Deloitte were appointed to WBHO Infrastructure Pty Ltd in Feb 2022and a creditors’ trust was established in Mar 2022. An interim distribution was paid to the WBHOI Creditors’ Trust beneficiaries in Sep 2024. As at Aug 2025, the beneficiaries are waiting for a final distribution.
* PROMOTING AN OPTIMAL CORPORATE RESCUE CULTURE IN AUSTRALIA: THE ROLE AND EFFICACY OF THE VOLUNTARY ADMINISTRATION REGIME Jason Robert Harris (Aug 2021)What’s next?
Contact ClaimCloud today if you have a creditor claim in an insolvency. You can the end the uncertainty regarding both the financial value of your claim and how long it will be until you receive payment.
Any information provided by ClaimCloud is not intended to constitute any financial or investment advice. Before you consider selling any claim you have to ClaimCloud, you should consider obtaining financial, tax and investment advice that takes into account your financial circumstances, objectives and needs. You should also consider any information from or published by the company you have a creditor claim with or any appointed administrators or liquidators that may impact your creditor claim.
+61 484 637 711 +1 808 465 5608 mitch@clmcld.com