Receivership in Australia 2025: What Businesses and Creditors Need to Know

Receivership is a term that’s resurfacing in business news across Australia in 2025, as companies from retail chains to tech startups face financial challenges amid rising interest rates and global uncertainty. But what does receivership actually mean, and how do recent policy changes affect everyone involved — from business owners to employees and creditors?

What Is Receivership and When Is It Triggered?

Receivership is a formal insolvency process where an independent party — the receiver — is appointed to take control of some or all of a company’s assets. Unlike voluntary administration, receivership is usually initiated by a secured creditor (often a bank) to recover outstanding debts, particularly when a business defaults on its loan agreements.

• Appointed by secured creditors: Typically, a bank or financier holding a fixed or floating charge over the company’s assets.
• Main goal: To collect and sell assets to repay the secured debt. The receiver’s duty is primarily to the creditor, not to the company or its shareholders.
• Common triggers: Loan defaults, breaches of financial covenants, or severe cash flow issues.

For example, in early 2025, several large construction firms entered receivership after failing to meet new, stricter lending criteria imposed by major banks in response to ongoing market volatility.

How Receivership Works: The Process Step by Step

Once a receiver is appointed, the process unfolds with a clear sequence:

1. Receiver appointment: The secured creditor appoints a licensed receiver, who takes immediate control of specified company assets.
2. Asset assessment: The receiver identifies, secures, and values the assets over which they have control — this could include property, equipment, stock, or intellectual property.
3. Business operations: In some cases, the receiver continues to operate the business, especially if it helps maximise asset value for sale.
4. Asset sale: The receiver sells assets and distributes proceeds first to the secured creditor. Any surplus (after costs and secured debts) may be passed to other creditors.
5. Reporting obligations: Receivers must report to ASIC and provide updates to all creditors and directors.

In 2025, ASIC has introduced more rigorous reporting standards for receivers, aimed at increasing transparency for unsecured creditors and employees — a response to criticism following high-profile retail collapses in 2024.

Impacts of Receivership: Businesses, Creditors, and Employees

Receivership can be a lifeline or a last resort, depending on your perspective:

• For business owners and directors: Control is lost over the assets in receivership, and personal liability can arise if directors have provided personal guarantees.
• For secured creditors: Receivership is an effective tool to recover debts, but asset values can be diminished in distressed sales.
• For unsecured creditors and employees: Unsecured creditors typically rank behind secured creditors, meaning they may receive little or nothing. However, under the Fair Entitlements Guarantee (FEG), eligible employees may claim unpaid wages and entitlements from the government.

Policy updates in 2025 have expanded FEG coverage, allowing faster access to unpaid superannuation and redundancy payments for employees affected by receiverships — a move welcomed by unions and worker advocacy groups.

Receivership in the Current Economic Climate

With Australia’s economy adjusting to higher borrowing costs and global supply chain pressures in 2025, the number of companies entering receivership has risen, particularly in sectors like construction, retail, and hospitality. The government has responded with targeted support for small businesses and tighter regulations on pre-insolvency advisors, aiming to curb unnecessary or predatory appointments.

Recent high-profile cases — including the receivership of a major mid-tier retailer — have highlighted the importance of early intervention and clear communication with creditors and staff. For many businesses, negotiating with lenders or seeking advice at the first sign of trouble can mean the difference between survival and receivership.