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ARTICLE · 29 JULY 2026

Signed, Sealed, Regretted: Onerous Contracts In Administration

Bartier Perry Solicitors
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Administrators facing onerous contracts lack the statutory power to disclaim them—a tool reserved exclusively for liquidators under section 568 of the Corporations Act. This article examines the three practical mechanisms available to administrators: repudiation to crystallise claims, Court protection under section 447A to shield personal liability, and carefully structured DOCAs that can release debts without crossing into unfair discrimination.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Adam Cutri
Adam Cutri
Garrett Williams
Garrett Williams
Haya Kaiyum
Haya Kaiyum
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Administrators do not have the power to disclaim onerous contracts. That power belongs to liquidators alone. This article sets out what administrators can and cannot do, and how to manage onerous contracts in practice without crossing that line.

Key takeaway

Administrators facing onerous contracts have 3 tools available: repudiation, Court protection under section 447A, and a carefully structured DOCA.

What is an onerous contract?

An “onerous contract” is one where the cost of performance exceeds any benefit the company will receive. In practice, administrators encounter them regularly: unprofitable leases, long term supply agreements, service contracts the company cannot meet, and contracts attached to land carrying environmental liabilities exceeding realisable value.

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