In March 2019, we started meeting with newly registered liquidators (RLs) shortly after their registration, to engage with them and open a channel of communications.

We appreciate RLs’ engagement in this process and have found the exercise to be a great way to introduce ourselves. The discussions allow RLs to better understand what our team does and ask us any questions they have. The engagements have helped us:

collect feedback on the registration process and how it can be improved, and
better gauge topics of interest or concern for RLs.

RLs are encouraged to reach out to us on any issue concerning ASIC and not solely about insolvency matters. While we cannot assist with all questions, we can help locate the relevant people within ASIC who can provide answers. To ensure a constructive and positive outcome we also encourage RLs to engage early with our team about insolvency matters presenting potential challenges.

Contact the ASIC RL team members in your state

Estimating costs for an AAF funding agreement

Funding granted from the Assetless Administration Fund (AAF) will only cover costs incurred from the commencement date of the funding agreement (once ASIC has signed). Costs incurred by the registered liquidator as part of investigations already undertaken will not be covered. As a result, funding requests should be prepared as early as possible in the liquidation.

When preparing a schedule of estimated costs, only include future costs. Do not include costs for work or tasks previously completed. If there is additional work to do on an area where work has already been carried out (e.g. review of books and records), the schedule of estimated costs should make it clear this is relevant new work.

To ensure a more efficient approval process, cost estimates should be sufficiently detailed and thoroughly considered, including the appropriate level of seniority required to complete the required tasks. While there is no predetermined amount of funding for any given scenario, the costs estimated must be commensurate with the difficulty and extent of the tasks to be undertaken.

Reporting written-off fees incurred in AAF matters

We ask registered liquidators who experience write-offs in an Assetless Administration Fund (AAF) matter to advise us and provide a full accounting of your costs with your final invoice.

By telling ASIC that you have or need to write off costs, in particular fees, you provide a realistic guide about how much it actually costs to do the work required to comply with funding agreement terms. This is valuable information which may help us determine the amount of funding required for funding future applications.

Please note that our standard terms for agreements under the AAF state that variations to existing funding must be approved before being incurred. Disbursements, costs and fees incurred which exceed previous approvals are unable to be reimbursed and may result in fees being written off.

Request Assistance for External Administration Program

Registered liquidators can request assistance from ASIC online via ASIC’s Regulatory Portal in circumstances where officers and individuals related to an entity in external administration fail to comply with their legislative requirements.

Last financial year we received 656 requests for assistance. During the same period, ASIC achieved:

280 compliance outcomes
333 convictions for 389 offences of 213 defendants.

These figures do not include compliance occurring after conviction and demonstrate that, even during a challenging period of lockdowns, court closures and travel restrictions, the RAEA Program plays a vital role. It not only helps registered liquidators (RLs) obtain information from officers and third parties to assist with their investigations and asset recoveries – but can also lead to ASIC commencing criminal proceedings against officers and individuals related to an entity if they fail to provide a ROCAP (for company officers) or books and records (for company officers and third parties).

To maximise the outcomes, we need RLs and their staff to work with us by engaging in a positive and productive manner.

ASIC teams work together and can share information where there are opportunities to improve RL practices and procedures identified through the RAEA process.

In a recent example the Registered Liquidators team engaged with a liquidator about certain deficiencies and errors identified in their letters of demand and suggested improvements that could be made in the RL’s staffs’ engagement with ASIC staff during the RAEA process. After bringing these matters to the liquidator’s attention, the liquidator took positive steps to address the matters, including:

amending pro forma documents used to issue demands to officers and third parties, and
updating staff on the correct use of insolvency software and precedent documents.

Read about the RAEA

Obligations when a registered liquidator is replaced as external administrator

When an external administrator (EA) is replaced, various duties arise for both the incoming EA and the outgoing EA. We highlight three key duties to be aware of:

1. Transfer of external administration files and company books

An outgoing EA must transfer possession or control of any books relating to the external administration of the company (i.e. the external administration files and the company’s records) that are in their possession or control within 10 business days of the incoming EA’s appointment: section 70-30 of the Insolvency Practice Schedule (Corporations) (IPS).

2. Statutory report by a liquidator to creditors

A statutory report by a liquidator to creditors (Form 5601) under Rule 70-40 of the Insolvency Practice Rules (Corporations) 2016 (IPR) must be provided to creditors within three months after the liquidator is appointed.

This mandatory requirement extends to incoming liquidators. This is the case even if a liquidator who was appointed jointly and severally is replaced by a registered liquidator from the same firm and a statutory report to creditors has already been issued.

3. Initial Statutory Report (ISR)

Despite an outgoing EA or receiver having complied with section 533, 422 or 438D of the Corporations Act 2001, an incoming EA or receiver should form their own opinion of the conduct in the external administration or receivership. If the incoming EA or receiver has identified an offence, or that unsecured creditors may receive less than 50 cents in the dollar in a liquidation, then the same obligations apply to the incoming EA or receiver in the same timeframe.

4. Assetless Administration Funding

The incoming liquidator will need to lodge their own ISR to satisfy the eligibility criteria for funding under the Assetless Administration Fund. They cannot rely on the ISR lodged by the outgoing liquidator.

Keeping ASIC’s Register of Liquidators up to date

Have you changed firms, your practice name or moved offices to a new address? If so, then you need to notify ASIC of these changes and keep the Register of Liquidators up to date.

ASIC uses this data to publish lists of registered liquidators on its website that stakeholders may use when deciding who to approach when seeking advice.

Keeping your details up to date is not only important for people to contact you but is also necessary to comply with your legal obligations.

ASIC has recently written to some Registered Liquidators who had not kept their details up to date requesting them to update their other practice names and other places of practice on ASIC’s Register of Liquidators.

Find out more about how to notify ASIC of changes to your details

Meetings using virtual meeting technology

On 21 December 2020, we informed all registered liquidators (RLs) of changes to the Insolvency Practice Rules (Corporations) 2016 about meetings using virtual meeting technology (VMT). The 2020 amendments changed:

The notice requirements for meetings held using VMT – requiring the notice of meeting to include sufficient information to allow a person entitled to attend the meeting to participate in the meeting by means of the technology.
Conduct of meetings (including voting at meetings) held using VMT – requiring voting at a meeting held using VMT to be decided on a poll.

Section 9 of the Corporations Act 2001 defines VMT as ‘any technology that allows a person to participate in a meeting without being physically present at the meeting’. Accordingly, if any person attends the meeting by telephone, the meeting is being held using VMT.

ASIC asks that RLs and their staff be alert to:

how meetings are convened or held (either physically or entirely via VMT, or a combination of the two)
ensuring proforma meeting templates and procedures are updated to reflect the changes announced in December 2020
ensuring that voting at a meeting using VMT is taken on a poll.

RLs are encouraged to review their current external administration files to identify instances where resolutions passed have not complied with the new voting requirements. RLs are also encouraged to consider acting to rectify an invalid resolution when an opportunity to do so arises.

We will consider regulatory action in future if RLs do not comply with the voting requirements for meetings held using VMT.

Keeping websites up to date

ASIC has recently engaged with the operators of various websites regarding content that was either inaccurate or was possibly misleading. These websites were either operated by registered liquidators (RLs), their firms or other parties.

We ask RLs to regularly review and maintain their websites, and other online platforms such as Facebook pages, to avoid having inaccurate or out-of-date references to RLs and their staff, as well as to general insolvency information to creditors.

Examples of inappropriate or erroneous website content identified by ASIC include:

unauthorised use of ASIC’s logo (a registered trademark)
individuals referred to as RLs when they were either no longer registered or have never been an RL
individuals who are currently suspended for disciplinary reasons and have not identified this accordingly
the use of ‘Voluntary Administrator’, ‘Deed Administrator’ or ‘Receiver’ as a description of individuals’ qualifications
references to individuals being ‘Registered Insolvency Practitioners’, noting no such registration exists
using the designation of Official Liquidator despite the designation ceasing by operation of law from 1 March 2017. A person’s registration as Official Liquidator will remain current on the register of Official Liquidators until all ongoing court liquidations to which they were appointed at 1 March 2017 are finalised
references to RLs practising under a business name when this was not the case
reproduction of ASIC online content, without acknowledging ASIC’s copyright or otherwise correctly attributing the source
promoting services for formal external administration appointments despite no RL being associated with the website’s business

ASIC has issued guidance about what can and cannot be reproduced from ASIC’s website.

Such content may come to our attention through our day-to-day activities and from internal or external stakeholders. ASIC also contacts operators of websites who are not affiliated with an RL and appear to hold themselves out to be RLs or claim to be connected to RLs.

Director ID requirements

Company directors need to verify their identity as part of a new director identification number (director ID) requirement.

A director ID is a unique identifier that a director will apply for once and keep forever – to help prevent the use of false or fraudulent director identities.

All directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation will need a director ID.

On 1 November 2021 director ID applications opened via the new Australian Business Registry Services (ABRS).

The date people must apply for their director ID depends on when they become a director:

Existing directors have until 30 November 2022 to apply.
Directors appointed between 1 November 2021 and 4 April 2022 must apply within 28 days of their appointment.
From 5 April 2022, intending directors must apply before they are appointed.

The ABRS is responsible for administering director IDs and will provide support and guidance to directors to help them understand and meet their director ID obligation. ASIC is responsible for enforcing four new director ID offences under the Corporations Act 2001.

The director ID requirement does not replace existing requirements to keep company records updated. For example, directors must still notify their company of changes in address or other details. The company will still need to notify ASIC of any changes for the public record.

Is someone ‘insolvent under administration’?

Section 9 of the Corporations Act 2001 defines ‘insolvent under administration’ to include a person:

who is an undischarged bankrupt
whose property is subject to control under section 50 or Division 2 of Part X of the Bankruptcy Act 1966 (Bankruptcy Act)
who has executed a personal insolvency agreement under Part X of the Bankruptcy Act, the terms of which have not been fully complied with, and
who is a party (as a debtor) to a debt agreement under Part IX of the Bankruptcy Act.

Information about whether a person is, or has been, ‘insolvent under administration’ can be found on the National Personal Insolvency Index (NPII) – a publicly available electronic record of some personal insolvency proceedings in Australia maintained by the Inspector-General in Bankruptcy. The NPII provides information about individuals who have been subject to proceedings under the Bankruptcy Act from August 1928.

However, the NPII does not disclose a historic record of all persons who have been a party to a debt agreement. The NPII extract will provide information about a debt agreement for the following periods:

How the debt agreement is finalised	How long the information is retained on an NPII extract
If the applicant completed their debt agreement	Five years from the date the person makes their debt agreement or the date the obligations are discharged, whichever is later
If the applicant or their creditors terminated the debt agreement	Five years from the date the person makes their debt agreement or two years from the date of termination, whichever is later
If a court declares the debt agreement void	Five years from the date the person makes their debt agreement or two years from the date of the court order, whichever is later

See AFSA.gov.au

Parties should be aware of these limitations when searching the NPII.

Form 5022: Tips and reminders

Form 5022 should accurately state the nature of the resolutions obtained and provide accurate reporting on remuneration and disbursements, separately. The amount should be expressed as exclusive of GST as the proposal would be a sum plus GST because this is the amount of remuneration the registered liquidator will receive after the GST is accounted for in the BAS.

Media releases

Below are our most recent media releases related to corporate insolvency:

21-263MR ASIC provides relief for companies in external administration

21-264MR Sydney labour hire director disqualified from managing corporations for five years

21-280MR Victorian director charged with making a false statement to ASIC

21-281MR Director sentenced to community correction order for breaching directors’ duties

21-284MR Victorian director disqualified for two years and six months

21-291MR Sydney director disqualified from managing corporations for four years

21-292MR New South Wales director disqualified from managing corporations for four years

21-293MR Victorian director disqualified for failing to comply with directors’ duties, tax obligations and employment laws

21-296MR Former telecommunications director pleads guilty to breaching directors’ duties and dealing with the proceeds of crime

21-304MR Former company director from Queensland charged with breaching directors’ duties

21-315MR QLD agricultural director banned from managing corporations for five years

21-316MR Victorian company director banned from managing corporations for five years

21-317MR WA director disqualified for maximum period

21-334MR Director of staff recruitment business disqualified from managing corporations for two years

Insolvency statistics

ASIC publishes weekly statistics about companies entering external administration or controllership for the first time (Series 1B.1 to 1B.6) and about all insolvency appointments (Series 2B Notification of all external administration and controller appointments).

We recently introduced a base line measure (based on a three-year average) to both series now that it is more than 12 months since the initial impact of COVID-19.

Twelve-month rolling average

The 12-month rolling average to 31 October 2021 is down 20.2% on the previous year and down 44.3% on the base line measure (see Series 1B)

Financial year to date

Companies entering external administration for the financial year to date to 31 October 2021 is up 14.9% for the same period for the previous financial year but still down 50.8% against the equivalent base line measure (see Series 1B).

Contacts

Email support

Email support and contact details for ASIC team members for each state are available on the Contacts page.