The Australian Securities and Investments Commission (ASIC) has its eyes set on registered liquidators after its first annual report into the sector revealed that the regulator had opened eight new formal investigations for the calendar year 2011.
According to 'ASIC regulation of registered liquidators: January to December 2011' (REP 287), ASIC received 426 reports of alleged misconduct concerning registered liquidators, in some cases concerning the same external administration.
Such reports average 3.5 per cent of the total 75,951 reports and enquiries received by the regulator across all sectors over the five and a half years to 31 December 2011.
In 51 per cent of cases, complainants needed to be re-educated due to, for example, creditors not fully appreciating a liquidator's duties and obligations of the insolvency process, ASIC stated.
"The role of registered liquidators in this process cannot be overstated," said ASIC deputy chairman Belinda Gibson.
"Liquidators are entrusted with creditors' funds, and have considerable discretionary power over assets earmarked for creditors."
As part of its overall strategy for increased transparency, ASIC will use part of the $47.3 million (over four years) handed down from the Federal Budget to lift its surveillance capabilities, provide guidance to the industry on its expectations and direct "creditors towards more self-help assistance" to ensure that they more adequately oversee the liquidation process, Gibson said.
"Clearly, there will be costs in winding up a business, but the charges need to be reasonable and reported in a way which allows creditors to make an informed decision to approve or not approve," she added.
Cases highlighted in the report included the cancellation of John Lord as an official liquidator on 26 August 2011 and the six-year gaol term given to former liquidator Stuart Ariff after he was found guilty by the District Court of New South Wales on 26 September 2011.
