ASIC Corporate Insolvency Update Issue 10

In December 2018, ASIC posted its Corporate Insolvency update on their website about the latest regulatory developments and issues affecting corporate insolvency markets. Here is a summary of key points:

  1. Lodgement of Declarations of Independence and Relevant Relationships and Declarations of Indemnities (“DIRRI”) with ASIC. ASIC provides the following key reminders when registered liquidators lodge Form 531 :-
  • ASIC believes that a natural person generates a referral and therefore a company or firm cannot of itself refer a matter;
  • Form 531 should detail the referrer’s full name and the firm/ business they work for;
  • ASIC believes that generally the director of a company cannot refer themselves to you. The director decided to contact you for some reason and you should disclose that reason in your DIRRI;
  • From 1 January 2019, ASIC may take further actions against registered liquidators should they fail to lodge DIRRI;
  • A voluntary administrator must lodge a copy of their DIRRI with ASIC ‘as soon as practicable’ after making the DIRRI, in all voluntary administrations commencing after 1 March 2017;
  • A liquidator must lodge a copy of their DIRRI with ASIC ‘as soon as practicable’ after making the DIRRI, in all creditors’ voluntary liquidations commencing after 1 September 2017; and
  • ASIC believes ‘as soon as practicable’ should not be more than two business days of signing it.
  1. Reimbursement

ASIC emphasised the importance of registered liquidators providing sufficient meaning and clear disclosure about disbursements they are seeking, including the total amount, descriptions,    the basis and method of calculation and reasons for such expenses.

  1. Assetless Administration Fund

Section 90-23 of Schedule 2 of the Corporations Act 2001 grants ASIC power to appoint a Reviewing Liquidator to inquire, investigate and report on the external administration of a Company where illegal phoenix activity is suspected. Anyone can approach ASIC directly with details of their concerns including any evidence they think will assist ASIC in deciding to appoint a Reviewing Liquidator. ASIC emphasised that the Reviewing Liquidator appointments will only relate to phoenix matters but the findings may not result in enforcement actions.

The Reviewing Liquidator Panel is in the final stages to be finalised by ASIC for appointing suitably qualified and experienced Reviewing Liquidators. ASIC expects to commence appointing Reviewing Liquidators soon.

  1. Report on Company Activities and Property (“ROCAP”)

ASIC encourages that for all new Companies entering external administration post 1 November 2018, the Director or Officer should be provided with the ROCAP to complete. Further, Part B of ROCAP should not be lodged with ASIC.