media release

05-395 ASIC releases information on insolvency

Published

ASIC has released a series of information sheets to increase awareness of company insolvency procedures among directors, employees, creditors and shareholders.

ASIC Commissioner, Professor Berna Collier, said the information sheets are designed to provide Australians who may be affected by a company's insolvency with a basic understanding of the three most common insolvency procedures – liquidation, voluntary administration, and receivership. The package also includes a glossary of commonly used insolvency terms.

‘Insolvency is a complex area and many people affected by the failure of a company have had no previous experience of the process and little knowledge of their rights. An understanding of what is happening should make the process less daunting,’ Professor Collier said.

‘Insolvency has become an increased priority for ASIC as we focus on reducing insolvent trading and encouraging directors and officers of financially troubled companies to act quickly and in the interests of creditors.’

‘This package supports this focus and is another important step towards ensuring the wider business community are well informed regarding insolvency laws and processes and aware of their rights and responsibilities,’ she said.

Professor Collier said the information package has been endorsed by Australia's peak body for insolvency practitioners, the Insolvency Practitioners Association of Australia (IPAA), and a co-badged ASIC/IPAA list of the sheets has been issued to insolvency professionals.

‘ASIC encourages insolvency practitioners to provide a copy of this list, or of the relevant information sheets, to those affected by a company's insolvency. Improved awareness of an external administrator's responsibilities will enhance public confidence in Australia's corporate insolvency system,’ she said.

ASIC’s information sheets cover the following topics: