The appointment of voluntary administrators to David Jones on 5 November 2026 shows that even long-established retailers can face financial distress. It is reported that the physical/online stores are continuing to trade while options for the business are assessed by administrators (McGrathNicol appointed as voluntary administrators; and FTI Consulting separately appointed as receiver and manager).
The circumstances of what happens in the voluntary administration will be different for every retailer. But when a company enters voluntary administration, customers, employees and suppliers all ask the same question: what happens to me? This article shares general information only about how voluntary administration in a retail context works.
What is voluntary administration?
Voluntary administration is designed to resolve the future of a financially distressed company quickly. An independent registered liquidator takes control of the company as voluntary administrator. The administrator investigates the company’s affairs and reports to creditors, who ultimately decide whether the company should either:
- enter a Deed of Company Arrangement (DOCA) and end the administration under a new ‘deal’ with company creditors and therefore return control to the directors.
- or if a DOCA is not viable or accepted by creditors, then proceed to liquidation
- end the voluntary administration and pass control of the company back to the directors.
For a retailer, entering voluntary administration usually means the business will continue trading while the administrator assesses restructuring, recapitalisation, or sale options.
For customers, however, continued trading does not automatically mean every existing sale/purchase obligation will be honoured.
What happens to consumer rights?
Australian Consumer Law continues to provide important protections, but insolvency can affect a consumer’s practical ability to exercise those rights.
The ACCC (Australian Competition & Consumer Commission) identifies several situations where customers can be affected, including where they have:
- paid for goods or services not yet received
- paid a deposit
- received a credit note
- purchased a gift card or voucher
- made a warranty claim.
A customer owed money will generally rank as an unsecured creditor. That matters because unsecured creditors do not have first priority to the insolvent company’s available assets. To learn more, read the ACCC’s information on When a business goes bust | the impact of insolvency on consumer rights.
Customers should therefore monitor announcements from the administrator or receiver rather than assume normal refund, return, or redemption arrangements will continue.
What happens to gift cards?
Gift cards are often one of the first concerns when a major retailer enters administration due to their wide circulation and appeal. Normally, gift cards purchased on or after 1 November 2019 must remain redeemable for at least three years, subject to limited exceptions. In an insolvency, however, holding a valid gift card does not necessarily mean the retailer must continue accepting it.
A customer with an unused gift card or voucher may instead become an unsecured creditor for the outstanding value. The payment by a consumer to a retailer in exchange for a gift card is effectively an unsecured loan from the consumer to the retailer. If the retailer collapses, gift card holders will ordinarily be classified as the company’s unsecured creditors—alongside the Australian Taxation Office, unsecured lenders, and trade creditors.
However, the administrator or receiver may decide to honour gift cards while the business continues trading, sometimes subject to particular conditions, but customers should check the specific directions issued for that administration.
If gift cards are not being honoured, customers should retain their card, purchase receipt and any evidence of the outstanding balance. They may need to lodge a creditor claim (proof of debt) with the administrator.
What about lay-bys?
Lay-by may be less prominent than it once was, but it remains part of Australian retail. The ACCC continues to regulate lay-by agreements under the Australian Consumer Law. The crucial difference between lay-by and an ordinary purchase is that the customer is making payments towards goods that they have not yet received.
If the retailer becomes insolvent before the goods are supplied, the customer may be owed the money already paid. The ACCC specifically identifies consumers who have paid a deposit, including under a lay-by agreement, as potentially being owed money by an insolvent business.
Whether the customer receives the goods, obtains a refund or needs to lodge a creditor claim will depend on the circumstances and the approach adopted by the voluntary administrator. Customers should keep the lay-by agreement, receipts and payment records. These documents may be required to establish the amount owed.
What happens with BNPL?
Buy now, pay later (BNPL) facilities like Afterpay and Zip Pay adds another party to the transaction. With BNPL, the customer generally has an arrangement with a BNPL provider to pay for the purchase via instalments. This can make the position different from a traditional lay-by, where the retailer holds the goods until the customer completes payment.
If a retailer becomes insolvent before supplying goods bought through BNPL, customers should not simply stop scheduled repayments. They should check their BNPL agreement and contact the provider promptly to dispute the transaction or explain that the merchant has entered external administration.
Since 10 June 2025, BNPL products have been regulated under Australia’s national credit laws. BNPL providers must hold an Australian Credit Licence, maintain internal dispute resolution processes and belong to the Australian Financial Complaints Authority. This gives consumers access to free external dispute resolution if they cannot resolve a complaint with their BNPL provider.
The exact outcome will depend on the BNPL contract, whether the goods were supplied and the circumstances of the transaction.
What happens to employees?
Voluntary administration also creates immediate uncertainty for employees. Employees may continue working while the business trades under external administration, as is reportedly currently occurring at David Jones. The receivers have advised staff that they will continue to be paid normally while operations are reviewed, although changes to the retail footprint are expected and staff and unions are to be consulted once decisions are made.
More generally, employees can be creditors for unpaid wages and other employment entitlements. Importantly, employees form a special category of unsecured creditor and outstanding employee entitlements usually have priority over ordinary unsecured creditor claims.
If a company ultimately enters liquidation and cannot meet employee entitlements, eligible employees may be able to access the Australian Government’s Fair Entitlements Guarantee (FEG).
FEG can cover certain unpaid entitlements, including:
- up to 13 weeks of unpaid wages, subject to the applicable payment cap
- annual leave
- long service leave
- up to five weeks’ payment in lieu of notice
- redundancy pay of up to four weeks for each full year of service.
FEG does not cover every entitlement. For example, it does not cover unpaid superannuation. It also applies to eligible employees following liquidation or bankruptcy, rather than simply because a company has entered voluntary administration.
What should customers do?
If a retailer you deal with enters voluntary administration register for the voluntary administrator’s announcements. These should explain whether stores are continuing to trade and how existing orders, returns, gift cards and other customer claims will be treated.
Establish whether you are owed money. If the retailer cannot fulfil an existing obligation, you may need to lodge a proof of debt or creditor claim in due course. Check your records for receipts, order confirmations, gift card details, lay-by statements, BNPL records and other correspondence and make digital copies of anything you have in hardcopy.
Contact your payment provider where appropriate. Depending on how you paid and the circumstances, there may be a separate dispute or recovery process available through a bank, card issuer, or BNPL provider.
The bigger picture
Voluntary administration does not automatically mean the end of a retailer. It creates breathing space to assess whether the business can be restructured, recapitalised or sold, and whether doing so could produce a better outcome than an immediate liquidation.
Obviously, the effects extend well beyond directors and lenders. Customers may have unfulfilled orders, gift cards or lay-bys. Employees may be concerned about wages and jobs. Suppliers may be carrying significant unpaid invoices. And as a national community, we risk losing a retailer we are proud to buy from.
For businesses facing financial distress, seeking advice early gives directors and advisers more time to understand the options available and determine the most appropriate path forward.
SV Partners provides specialist corporate insolvency, restructuring and turnaround services across Australia, including voluntary administration, receiverships and business restructuring.
Disclaimer: This article provides general information only and does not constitute legal or financial advice. The treatment of customers, creditors and employees will depend on the circumstances of each external administration.
Article by Jason Porter (Director) – Sydney
Gift card FAQs
What about chargebacks from my bank?
If the gift card was purchased via a credit card, the purchaser may be able to apply for a ‘chargeback’ from their bank/financial institution.
Why can’t the voluntary administrator just honour my gift card?
If the voluntary administrator is continuing to trade the business, honouring the gift card would effectively reduce the company’s stock level and provide no additional increase to realisable assets. If the voluntary administrator is not trading and has therefore closed the physical stores or online store, providing a refund to the gift holder would either:
- be impossible, if the funds are not available to refund
- reduce the balance of funds available to the voluntary administrator to distribute.
In both above scenarios, honouring or refunding the value of the gift card would provide a priority to the gift card holders at the expense of other creditors, such as the retailer’s employees.
Can the voluntary administrator decide to honour the gift card under special conditions?
Yes. In many insolvencies, like the voluntary administration of Toys r Us in 2018, the voluntary administrator may allow customers/consumers to use their gift cards on certain conditions that provide some return to the company in exchange for honouring the card. For example, requiring an additional dollar to be spent for every dollar redeemed on the gift card.
What is the current law in relation to gift cards?
The payment by a consumer to a retailer in exchange for a gift card is effectively an unsecured loan from the consumer to the retailer.