Ironbark
2 November 2026
ASIC’s liquidation review: the recovery gap – “Quick Take”
Ironbark Litigation Funding’s “Quick Takes” are for time poor people – we do the work distilling the subject matter so you don’t have to.
What happened
On 27 October 2026 the Australian Securities and Investments Commission (ASIC) released Report 843, Review of court and creditors’ voluntary liquidation process: 2021–2025 (REP 843), together with a data pack. It covers 26,664 liquidations that began between 1 July 2021 and 30 June 2025. These were 7,023 court liquidations and 19,641 creditors’ voluntary liquidations (CVLs), and the analysis draws on the forms liquidators lodge with ASIC. ASIC says it has never published this level of detail before.
Most press coverage went to returns. Only 5.3% of finalised liquidations paid ordinary unsecured creditors a dividend, and where one was paid the median was 9.8 cents in the dollar. About half of all liquidations realised $10,000 or less in assets, and about a quarter realised nothing.
For insolvency practitioners and their lawyers, the recovery figures matter more.
The recovery gap
- Liquidators identified a potential recovery action in 84.1% of initial statutory reports to creditors.
- Yet 24,363 of the 26,664 appointments (91.4%) reported no recovery at all.
- Recoveries other than insolvent trading were reported in 8.9% of finalised liquidations. Insolvent trading recoveries were reported in only 0.9%.
- Insolvent trading recoveries totalled $29.6 million across about 246 appointments. The median in finalised appointments was $30,000.
- Where a finalised liquidation reported a recovery, the median was $20,878. Only 18 appointments reported recoveries over $1 million.
ASIC adds some fair caveats. Flagging a potential action “does not establish that a claim exists”. The two datasets also cover different stages of a liquidation, so you can’t simply subtract one figure from the other. The recovery figures are gross (before the cost of investigating and pursuing claims) and were identified by keyword searches of ledger accounts, so ASIC calls them indicative.
Even so, the gap is wide. ASIC lists the familiar reasons potential claims go nowhere:
- the liquidator lacks the funds or information to investigate;
- the defendant lacks the assets to meet a judgment; or
- the likely return doesn’t justify the cost and risk.
Its overview concludes that limited funding, along with evidentiary and commercial considerations, may have restricted what liquidators could pursue.
Liquidators are carrying the system
Two more findings stand out.
- In 88.1% of finalised liquidations, the liquidator either had no remuneration approved or was paid less than the approved amount.
- About 67% of CVLs with available data reported an indemnity or upfront payment, with a median of about $11,000. Where these payments were made, they made up roughly 82% of total liquidation receipts. In many smaller liquidations, the indemnity effectively is the estate.
Court liquidators face an extra hurdle. Only 55.8% received a report on company activities and property (ROCAP) from directors by the end of the liquidation, against 93.2% for CVLs. Without books and records, a claim is hard to investigate, let alone prove.
Why it matters
People often ask me why so many claims flagged in a liquidator’s initial report never get run. REP 843 answers in numbers: the obstacle is rarely the law and usually the money. An unfair preference or insolvent trading claim with real merit but no funding returns nothing to creditors.
The Corporations Act already provides the tools:
- creditor funding with priority under s 564;
- litigation funding agreements, which need approval under s 477(2B) where they may run longer than three months; and
- assignment of claims under s 100-5 of the Insolvency Practice Schedule (Corporations) (IPS).
The data suggests these tools are being used far less often than the potential claims would justify.
What it means for liquidators, lawyers and creditors
- Liquidators: the value in a liquidation is won or lost in what happens after the initial report flags a claim. That means deciding early whether to investigate, fund, assign or abandon it, and recording the reasons. Keep an eye on the s 588FF(3) time limit, which can run out while an unfunded estate is still getting organised.
- Lawyers: with median recoveries in the tens of thousands of dollars, the costs of a small claim have to be in proportion to what it can recover. Larger claims, or several related ones together, are where outside funding is most likely to make sense.
- Creditors: if you are a significant creditor, you are not limited to waiting for a dividend. Funding or indemnifying the liquidator can let a claim proceed, and the court may order that you be repaid ahead of other creditors from what is recovered.
Summary
REP 843 is the clearest picture yet of Australian liquidations. Most companies arrive with little or nothing, and liquidators are often working at a loss. Potential claims are identified in most cases, but they are converted into recoveries in only a small minority. ASIC’s own explanation includes limited funding. For creditors, the lesson is that a claim on paper is not a recovery. Funding, assignment and creditor support decide whether those claims ever reach a courtroom or a settlement.
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