ASIC supervision of registered liquidators for January 2017 to June 2018

ASIC has provided an overview of its supervision of registered liquidators during the period 1 January 2017 to 30 June 2018.

Report 610 ASIC regulation of registered liquidators: 1 January 2017 to 30 June 2018 details:

  • the educative, stakeholder liaison, policy, supervisory and enforcement work ASIC undertook to improve the effectiveness of its regulation of the insolvency and restructuring sector;
  • and the work we do, and assistance we provide to registered liquidators, who wind up insolvent companies.

ASIC Commissioner John Price said, ‘It is important that registered liquidators can fulfil their obligations to creditors and members of failed companies. We work closely with practitioners to help them discharge their obligations to investigate possible misconduct and provide support through our liquidator assistance program to access failed company’s books and records or where necessary, prosecute non-compliant directors.

‘The Federal Government’s recent announcement to increase the Assetless Administration Fund to target illegal phoenix activity is welcomed and will help liquidators to undertake a thorough investigation where there is suspected illegal phoenix activity by directors or other officers.

‘We also remain focused on the conduct of registered liquidators when dealing with failed companies. Our work around supervising practitioners contributes to ensuring that trust and confidence in the profession is maintained at the high standards imposed by the law’, Mr Price said.

Key points:

ASIC assisted practitioners during the reporting period by:

  • releasing a new regulatory guide, updating and reissuing 13 information sheets reflecting the legislative changes introduced by the Insolvency Law Reform Act (2016);
  • providing guidance for registered liquidators to help improve their lodgement and publication obligations following the results of a project testing areas for improvement in liquidator compliance;
  • intervening or appearing as amicus curiae in two matters to assist the court involving issues of registered liquidator independence and remuneration;
  • assessing over 780 Assetless Administration Fund applications and approving over 200 applications, and
  • assisting liquidators to obtain books and records or reports as to affairs from over 1,350 requests and prosecuted over 380 directors for failing to assist registered liquidators.

Our work to ensure registered liquidators comply with their obligations and otherwise hold them accountable includes:

  • the cancellation of a liquidator registration in the Administrative Appeals Tribunal previously made by the Companies Auditors and Liquidators Disciplinary Board (CALDB) determining that his actions as an external administrator of several companies were deliberate and dishonest and that he was not a fit and proper person to be a registered liquidator;
  • acceptance of a court enforceable undertaking to cancel the registration of a liquidator following an investigation of his conduct of several external administrations;
  • three negotiated resolutions, two of which were sourced from our project work targeting lodgement and publication obligations;
  • commencing formal investigations of four registered liquidators to determine their competence to continue to act as registered liquidators;
  • issuing 12 directions to registered liquidators to remedy a failure to lodge documents, or give information or documents required to be lodged with ASIC;
  • reviewing registered liquidator renewal applications to determine whether they provided sufficient evidence to demonstrate that they had adequate and appropriate professional indemnity and fidelity insurance;
  • reviewing 579 annual liquidator returns to monitor compliance with continuing professional education requirements and to assess whether they were maintaining relevant experience through undertaking external administration appointments;
  • completing more than 50 reviews covering practitioner independence, competence and remuneration; and
  • assessing 464 reports of alleged misconduct about registered liquidators in reporting period. 69% of reports of alleged misconduct against registered liquidators resulted in educative outcomes for those making the report, including providing information about the applicable law or practice, or providing information about the normal practice of the insolvency process.

Background

Report 610 ASIC regulation of registered liquidators: 1 January 2017 to 30 June 2018 its seventh annual report into ASIC’s regulation of registered liquidators. As foreshadowed in our previous report, reporting is now aligned with the financial year and accordingly, this report covers an 18-month period.

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