Navigating insolvency and preserving care in the NDIS sector

A Western Sydney disability services provider set out with a simple goal: to improve the lives of people with disabilities and older Australians within their community, while giving them greater choice over their care. Built by a strong family work ethic that small operation grew – and grew.

That’s when cracks began to appear. By 2025, annual revenue had grown to more than $4 million and participant numbers were continuing to rise. On the surface, it was the kind of growth most businesses would welcome – but behind the scenes, that growth was becoming increasingly difficult to manage.

“This was a good business doing important work, but it had grown quickly and the financial side hadn’t kept pace,” says Jirsch Sutherland Partner Andrew Spring, who was involved in the subsequent voluntary administration. “They were very good at caring for people; they just weren’t as good at the financing and administration that needed to sit behind that care. In addition, there were times when they continued supporting NDIS participants before funding had been approved or after it had run out. You can understand why they did it, but those costs still have to be met.”

And they’re far from alone. National Disability Services’ 2025 State of the Disability Sector report found 77 per cent of providers had delivered unfunded supports, including support for participants through plan gaps and inadequate funding, at an average cost of almost $500,000 per provider. The same report points to considerable financial pressure across the sector: nearly half of providers reported a financial loss in 2024-25, while 81 per cent of those delivering NDIS supports said they could not continue providing services at current prices.

For the Western Sydney provider, those pressures had reached a point where something needed to change. By the time Jirsch Sutherland was appointed, it was supporting around 60 people, providing both care services and accommodation. “The challenge wasn’t a lack of demand for what the organisation did, it was making sure the business behind those services was sustainable,” says Spring. “Through the VA, our team worked with the provider to strengthen their administrative functions and put better systems and support around the day-to-day running of the business. The result was a restructuring that allowed the provider to keep operating and, importantly, continue caring for its participants.”

A sector under pressure

The financial pressures are also showing up in insolvency figures. ASIC data shows the number of companies entering external administration in the broader Health Care and Social Assistance sector – which includes NDIS-related businesses – more than doubled in 2022-23, jumped a further 76 per cent in 2023-24 and rose another 71 per cent in 2024-25. While the number eased slightly in 2025-26, it remains more than 500 per cent higher than four years ago.

While ASIC’s industry data does not separately identify NDIS providers, Jirsch Sutherland has seen a growing number of NDIS businesses experiencing financial distress. And although every business is different, some familiar themes are emerging: rapid growth, rising staffing costs, funding delays or shortfalls, unfunded services, poor financial oversight and mounting tax and superannuation debt.

For NDIS providers, there’s also another critical consideration when a business runs into trouble: continuity of care. Jirsch Sutherland Partner Chris Baskerville saw that first-hand when he was appointed liquidator of Brisbane disability services provider My Life Support Services in 2020. The business employed around 75 people and supported 90 clients – and despite being in liquidation, was profitable and cash-flow positive.

Baskerville made the unusual decision to continue trading while a buyer was sought. “We had to wear multiple hats,” he says. “Our team stepped into the day-to-day operation, managing everything from NDIS and compliance requirements to staffing and client needs, while keeping services running and preparing the business for sale. This approach paid off: the business was sold as a going concern, with many jobs preserved and the majority of clients continuing to receive care.”

The buyer was equally positive about the outcome. Nextt Group CEO Mark Mulder described it as “the smoothest transition” for any business the group has acquired, adding: “The Jirsch Sutherland team jumped in the deep end and held the company together during this very challenging time. They were always quick to discuss and resolve issues in a practical and principled way while keeping the commercial process on track throughout.”

The experiences also show there is no one-size-fits-all solution when an NDIS provider runs into financial difficulty. Depending on the circumstances, that might mean restructuring through a VA and DOCA, using the Small Business Restructuring regime, or – as My Life Support Services demonstrated – continuing to trade through liquidation while a new owner is found.

“What matters is understanding what’s actually driving the problems and whether there’s a viable business underneath them,” says Spring. “These are often businesses with good people, strong demand and an important role in their communities. Our job is to work out what can be fixed, what needs to change and which solution is going to deliver the best outcome.”