ASIC has employed new powers for the first time to appoint liquidators to six abandoned companies in a move that will assist employees gain access to the Fair Entitlements Guarantee (FEG).
The six abandoned companies owe 57 employees a total of approximately $730,799 in employee entitlements.
The FEG is a legislative safety net scheme funded by the Australian Government. It is designed to assist employees who are owed certain entitlements after losing their job because their employer went bankrupt or into liquidation.
Directors are sometimes either unable to discharge their duties or abandon their companies without putting them into liquidation, and this can result in employees who are owed entitlements being unable to access FEG.
FEG replaced the General Employee Entitlements Redundancy Scheme (GEERS).
'This important new power is one that ASIC takes great care in exercising', said ASIC Commissioner John Price.
'In deciding to place these companies into the hands of liquidators, we know that the affected employees will now be able to access the entitlements owed to them. We will continue to work with the appointed liquidators to see if other follow-up investigations are needed and if further action is warranted.'
The six companies wound up by ASIC are:
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Aztec Music Pty Ltd – Liquidator appointed: Shane Cremin of Rodgers Reidy
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We R Family Pty Ltd – Liquidator appointed: Richard Hughes and Nicholas Carter of Deloitte
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Kirmap Pty Ltd – Liquidator appointed: Mark Englebert of FTI Consulting
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Haymarket Pty Ltd – Liquidator appointed: Mark Englebert of FTI Consulting
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ACN 010 702 020 Pty Ltd formerly known as Sedco Communications Pty Ltd ACN: 010 702 020 – Liquidator appointed: Michael Carrafa of SV Partners
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Pivod Technologies (AUS) Pty Ltd – Liquidator appointed: Derrick Vickers and Melanie Grohovav of PricewaterhouseCoopers
Background
In November 2012, ASIC released guidance on exercising its discretionary power to order the winding up of abandoned companies to assist employees of companies that are abandoned (refer: 12-268MR).
Regulatory Guide 242 ASIC’s power to wind up abandoned companies (RG 242), which followed consultation with industry (Consultation Paper 180 ASIC's power to wind up abandoned companies (CP 180)), also explains how ASIC will prioritise companies for winding up.
RG 242 explains that in deciding when to exercise this discretion, ASIC will consider a number of factors including:
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the amount of outstanding employee entitlements claimed
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whether there is another creditor capable of winding up the company
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the amount of money available in the Assetless Administration Fund and how ASIC might best use this money, and
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whether the directors have abandoned the company.
RG 242 outlines how to make a request to ASIC to wind up an abandoned company, how ASIC will assess a request and what happens if ASIC does decide to wind up a company. It also outlines what other options employees who can pursue if ASIC decides not to wind up a company.
ASIC may appoint a registered liquidator when winding up an abandoned company and will remunerate the liquidator from the Assetless Administration Fund.
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