ASIC Corporate Insolvency Update - Issue 35
Issue 35, March 2025
Agents for mortgagee in possession
Unwarranted fees charged for the preparation of ROCAP
Did you know?Becoming a registered liquidator: Reminder of updated guidance on eligibility requirements
We have received feedback that some practitioners are not aware of the updated guidance in the revised Regulatory Guide 258 Registered liquidators: Registration, ongoing obligations, disciplinary actions and insurance requirements (RG 258) about the eligibility requirements to become a registered liquidator.
One of the eligibility requirements relates to qualifications, experience, knowledge and abilities as specified in the Insolvency Practice Rules (Corporations) 2016 (the Rules). The Rules provide that an applicant must have engaged in at least 4,000 hours of relevant employment at a senior level during the five years immediately preceding the day on which the application is made.
The law was amended in early 2021 to provide a committee with the power to determine that an applicant should be registered where they are not satisfied that the applicant has the necessary qualifications, experience, knowledge and abilities but are otherwise satisfied that the applicant should be registered as a liquidator.
In the updated RG 258 and the related Senior level employment history form, we included commentary that where an applicant does not meet the 4,000-hour requirement, but believes they otherwise meet the criteria, the applicant should still apply for registration and be prepared to explain to a committee their circumstances and why they believe they should be registered.
Applicants should also be mindful that the 4,000-hour requirement applies up to the day immediately prior to the application being made. Applicants may need to update their employment history tables when finalising their applications.
Early destruction of books
External administrators are required to retain all books of the company and of the external administration for at least five years from the end of the external administration. However, an external administrator may destroy the books before then where creditors have passed a resolution consenting to the early destruction of records and ASIC consents to the destruction.
In July 2023, we released the updated Regulatory Guide 81 External administration: Early destruction of books (RG 81) and provided detailed guidance on how ASIC interprets the law. In particular, RG 81 notes that ASIC will only consent to the early destruction of a company’s books but not those of the external administration (see RG 81.23 and RG 81.24).
When external administrators apply for permission for the early destruction of records, they often refer to a creditors’ resolution that commonly provides that creditors approve the early destruction of both the company’s and the external administrator’s books. As ASIC will only consent to the early destruction of the company’s books, this has led us to raise additional queries of the external administrator to confirm that they are aware that we would only give consent to destroy the company’s books, but not those of the external administration.
It will be helpful for us to grant consent in a more timely manner if external administrators, when making their application, provide an additional attachment to acknowledge that they understand ASIC will only consent to the destruction of the company’s books. External administrators may also change the relevant standard creditor resolution so that it only refers to the destruction of the company’s books or passing separate resolutions, one for the company’s books and another for the external administrator’s books.
Agents for mortgagee in possession
We have identified instances where registered liquidators (RLs) appointed as an agent for mortgagee in possession over property of a corporation are not lodging mandatory ASIC forms. Such appointments include those where the appointment is only made over real property.
A ‘controller’ in relation to property of a corporation includes anyone else who (whether or not as agent for the corporation) is in possession, or has control, of that property for the purpose of enforcing a security interest (see section 9 of the Corporations Act 2001).
We remind RLs that a controller must lodge Form 505 Notification of appointment of an external administrator (refer to section 427(2) of the Corporations Act) and Form 5602 Annual administration return (refer to section 422A(3) of the Corporations Act) as well as other forms required under the Corporations Act.
You can refer to ASIC’s Flowchart 10: Controller (other than a receiver, receiver and manager, or managing controller) for most commonly lodged forms.
Unwarranted fees charged for the preparation of ROCAP
We are aware of situations where advisers charged unwarranted fees for preparing the report on company activities and property (ROCAP) for company directors.
While there may be some circumstances where fees are warranted, registered liquidators should ensure company directors are aware that section 475(8) of the Corporations Act provides that a person preparing a ROCAP or a person who assists with preparing a ROCAP is allowed to be paid by the liquidator from company property the costs and expenses incurred in preparing the report that the liquidator considers reasonable.
Company directors should refer to Part A and Part B instructions in Form 507 Report on company activities and property.
Form 5601 lodgements
To assist registered liquidators reduce duplicative work, we changed our expected date of section 533(1) report lodgements to better align with lodgements in Form 5601 Statutory report by a liquidator to creditors. This is so that both reports can be worked on simultaneously, noting they have different requirements.
We recently carried out an industry-wide review of RLs’ compliance with lodging their three-month report to creditors via Form 5601 for both court liquidation and creditors’ voluntary liquidation appointments (where that appointment was the first appointment to that company).
The review covered liquidations that commenced between 1 July 2022 and 30 September 2024 and included Form 5601s lodged in those liquidations up to and including 28 February 2025.
We have written to the identified RLs, providing them with a list of apparent non-lodgement and late lodgements of Form 5601s and asking they lodge any outstanding forms where possible and provide us with:
- confirmation all outstanding lodgements have been submitted, or alternatively provide evidence of prior lodgement
- reason(s) for failing to lodge the forms on time or at all
- confirmation whether a report was sent to creditors within the required timeframe for each company in the list, and if not, why not, and
- confirmation they have reviewed their checklists and policies in relation to lodgements, and the measures they have in place to avoid future non- or late lodgements.
We ask that all registered liquidators consider their checklists and policies to make sure they are adequate to support on-time lodgement.
Did you know?
ASIC is a creditor – where should RLs send creditor correspondence?
We continue to see creditor correspondence being sent to incorrect ASIC mailboxes. Where ASIC is a creditor, RLs and their staff must send their correspondence directly to epaymentenquiries@asic.gov.au.
Liquidator portal delays
Liquidator portal outages are generally momentary. From time to time, forms lodged may stay in ‘waiting’ status without a document lodgement number. These forms are usually processed by the next business day.
If your form stays in ‘waiting’ status for longer than one business day, you can contact rlqueries@asic.gov.au to advise of portal issues.
Company searches
Registered liquidators would be aware of the importance of undertaking company searches prior to taking an appointment. If a historical company search has been purchased and you want to check for any new lodgements in the lead up to your appointment, you can undertake a free ‘Organisation & Business Names’ search via ASIC Connect.
Form 5022 Outcome of proposal to creditors or contributories
Where multiple proposals are decided on the same day in the same external administration, registered liquidators are required to lodge a Form 5022 Outcome of proposal to creditors or contributories for each resolution.
When we calculate your industry funding business activity metrics, we will account for multiple lodgements for resolutions decided on the same day as a single lodgement.
See our FAQs on industry funding for registered liquidators for further guidance on the industry funding levy.
Media releases and news articles
25-005MR ASIC acts to protect small business - Q2 FY25 update
24-291MR Perth property developer disqualified from managing corporations for four years
Insolvency statistics
Our insolvency statistics show that 9,429 companies entered external administration during the first eight months of the 2024–25 financial year, up 42.6% from the 6,611 companies recorded for the same period in 2023–24.
At 28 February 2025 there were 3.485 million registered companies. The ratio of companies entering external administration in the 12 months to 28 February 2025 compared to the number registered (0.40%) is up from the 12 months to 29 February 2024 (0.29%) but still well below the prior peaks in the 2011–12 and 2012–13 financial years of 0.56% and 0.53%, respectively.
Small business restructuring appointments continue to grow strongly, up more than 200% to 1,874 appointments for the first eight months of the 2024–25 financial year compared to 666 appointments for the same period in 2023–24, and accounts for 20% of companies entering external administration now.
For more information, see the Insolvency statistics on the ASIC website.
Contacts
Email support and contact details for ASIC team members for each state and territory are available on the Contacts page.