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Published online by Cambridge University Press: 01 January 2025
The loss suffered by unsecured creditors of all insolvent companies is the non-payment in full of amounts rightfully owed to them. This loss is all the more unacceptable to creditors when a company has been illegally phoenixed by the transfer from the insolvent company of assets at undervalue. One way of increasing the pool of funds available for distribution to creditors is to issue proceedings seeking compensation against directors alleging that their ‘phoenixing’ amounted to a breach of directors’ duties or insolvent trading. Such an action may be instigated by the liquidator and by ASIC. ASIC's enforcement role can be contrasted with the recovery role of the liquidator where the latter acts primarily in the furtherance of private interests, being those of the insolvent company's creditors; ASIC's mandate, on the other hand, is to act in the public interest. The purpose of this article is to examine the enforcement roles of liquidators and ASIC where suspected illegal phoenix activity has occurred. Following consideration of the difficulties faced by liquidators acting on behalf of creditors of phoenixed companies, this article considers whether it is appropriate, from a policy perspective, for the public regulator to promote private interests by exercising its enforcement powers for the benefit of creditors. The argument in favour of a publicly funded regulator seeking compensation for creditor losses is particularly compelling in the context of illegal phoenix activity, given the inability of creditors to bring enforcement proceedings themselves and the difficulties faced by liquidators when they seek redress for creditors’ losses.
The authors thank the Australian Research Council for its generous support for this research: DP140102277, ‘Phoenix Activity: Regulating Fraudulent Use of the Corporate Form’.
1 A 2014 Productivity Commission report contained recommendations to improve access to justice generally which included measures concerning consumers’ lack of information about avenues of redress, the value of early and informal solutions, problems with the formal system of justice, and access to justice for disadvantaged people. Productivity Commission, Parliament of Australia, Inquiry Report No 72: Access to Justice Arrangements (2014), 41–72 <http://www.pc.gov.au/inquiries/completed/access-justice/report/access-justice-volume1.pdf>.
2 Corporations Act 2001 (Cth) ss 180–183, 588G. Phoenixing may also constitute a range of tax crimes under the Taxation Administration Act 1953 (Cth) pt III div 2. Directors may also be liable for certain unremitted company tax obligations under Taxation Administration Act 1953 (Cth) sch 1 div 269. These are discussed further below.
3 Corporations Act 2001 (Cth) s 477.
4 The ASIC Act 2001 (Cth) states that: In performing its functions and exercising its powers, ASIC must strive to: maintain, facilitate and improve the performance of the financial system and the entities within that system in the interests of commercial certainty, reducing business costs, and the efficiency and development of the economy: ASIC Act 2001 (Cth) s 1(2)(a).
5 See ASIC, Information Sheet 151: ASIC's approach to enforcement, September 2013, <http://download.asic.gov.au/media/1339118/INFO_151_ASIC_approach_to_enforcement_20130916.pdf>, 1: ‘We use enforcement to deter misconduct.’
6 See Welsh, Michelle, ‘Realising the Public Potential of Corporate Law: Twenty Years of Civil Penalty Enforcement in Australia’ (2014) 42(1) Federal Law Review 217CrossRefGoogle Scholar for a discussion of this issue in the context of ASIC's enforcement of the directors’ duties generally.
7 Corporations Act 2001 (Cth) s 1317H.
8 See generally Senate Economic References Committee, Commonwealth Senate, Performance of the Australian Securities and Investments Commission (June 2014) [17.1] and ch 17 generally (‘SERC, Performance of ASIC’).
9 Corporations Act 2001 (Cth) s 516.
10 Halpern, Paul, Trebilcock, Michael and Turnbull, Stuart, ‘An Economic Analysis of Limited Liability in Corporation Law’ (1980) 30 University of Toronto Law Journal 117CrossRefGoogle Scholar; Easterbrook, Frank and Fischel, Daniel, The Economic Structure of Corporate Law (Harvard University Press, 1991) ch 2Google Scholar; Posner, Richard, Economic Analysis of Law (Aspen Publishers, 5th ed, 1998)Google Scholar; Posner, Richard, ‘The Rights of Creditors of Affiliated Corporations’ (1976) 43 University of Chicago Law Review 499.CrossRefGoogle Scholar
11 Because this article is concerned with ASIC's role in augmenting enforcement actions by liquidators, it does not consider voluntary administration, one of the alternatives to liquidation.
12 Corporations Act 2001 (Cth) s 471B.
13 Ibid ss 555, 556.
14 Ibid s 477.
15 Jackson, Thomas, ‘Bankruptcy, Non-Bankruptcy Entitlements, and the Creditors’ Bargain’ (1982) 91(5) Yale Law Journal 857, 864.CrossRefGoogle Scholar
16 See Flessner, describing the capitalist ‘common pool’ philosophy. He observed that under this philosophy, claimants in the aggregate must realise as much as they would have received if they had enforced the claims themselves. Flessner, Alex, ‘Philosophies of Business Bankruptcy Law: An International Overview’ in Ziegel, Jacob, Current Developments in International and Comparative Corporate Insolvency Law (Clarendon Press, 1994) 19, 23.CrossRefGoogle Scholar
17 Jackson, above n 15, 862–63.
18 Jackson calls this ‘the race to the courthouse’: Jackson, above n 15, 862.
19 If creditors knew their own ability to recover was based upon being the first to initiate action, they would each spend time and money monitoring the company's solvency. The costs of monitoring would be passed on to the company, making goods and services more expensive. This would affect the profitability of the enterprise or else the company would in turn pass these costs on to their own customers.
20 Corporations Act 2001 (Cth) s 95A states that an insolvent company is one that is not solvent. Solvent is defined as being ‘able to pay all the person's debts, as and when they become due and payable.’
21 See eg Commonwealth Treasury, ‘Action against Fraudulent Phoenix Activity’ (Proposals Paper, Treasury, Australian Government, 2009) 2; Law Reform Committee, ‘Curbing the Phoenix Company: First Report on the Law Relating to Directors and Managers of Insolvent Corporations‘(Report No 83, Parliamentary Library, Parliament of Victoria, 1994); Australian Securities Commission, ‘Project One: Phoenix Activity and Insolvent Trading Public Version’ (Research Paper 95/01, May 1996) 39; Parliamentary Joint Committee on Corporations and Financial Services, Parliament of Australia, Corporate Insolvency Laws: A Stocktake (2004); Commonwealth, Royal Commission into the Building and Construction Industry, Final Report (2003) vol 8, 111–219; Australian Securities and Investments Commission, Small Business – Illegal Phoenix Activity (10 October 2014) <http://www.asic.gov.au/for-business/your-business/small-business/compliance-for-small-business/small-business-illegal-phoenix-activity/>.
22 See generally, Helen Anderson et al, Defining and Profiling Phoenix Activity, Centre for Corporate Law and Securities Regulation, December 2014, <http://law.unimelb.edu.au/__data/assets/pdf_file/0007/1709503/15-Definingandprofilingphoenixactivity-reportfinal2.pdf>.
23 Corporations Act 2001 (Cth) ss 180–183.
24 Ibid s 184.
25 Haines, Fiona, The Paradox of Regulation What Regulation Can Achieve and What It Cannot (Edward Elgar, 2011) 22.CrossRefGoogle Scholar
26 See further Anderson et al, Defining and Profiling Phoenix Activity, above n 22.
27 Taxation Administration Act 1953 (Cth) sch 1 s 269-15.
28 Ibid s 255-100.
29 Corporations Act 2001 (Cth) s 556.
30 The General Employee Entitlements and Redundancy Scheme (‘GEERS’) was the taxpayer-funded safety net scheme for unpaid wages and other entitlements for employees of insolvent employers. This was replaced by the Fair Entitlements Guarantee in 2012.
31 Australian Government Department of Employment, Fair Entitlements Guarantee (8 June 2016), <https://employment.gov.au/fair-entitlements-guarantee-feg>.
32 Fair Work Act 2009 (Cth) ss 45, 50.
33 Ibid s 550.
34 The FWO only commences litigation where there is sufficient evidence and, on balance, it considers that is in the public interest to do so and a proper response to the conduct. See FWO, Guidance Note 1 – Litigation Policy <http://www.fairwork.gov.au/about-us/policies-and-guides/internal-policies-and-plans#guidenote>.
35 It is also possible for the penalty ordered to be payable to the employees; see Fair Work Act 2009 (Cth) s 545(3). The court may order compensation against those in breach of civil remedy provisions of the Fair Work Act pursuant to s 545(2)(b) but there are questions over the availability of the compensation remedy against accessories. See further Anderson, Helen and Howe, John, ‘Making Sense of the Compensation Remedy in Cases of Accessorial Liability under the Fair Work Act’, (2012) 36(2) Melbourne University Law Review 335.Google Scholar
36 Fair Work Act 2009 (Cth) s 539.
37 For a fuller discussion of the recovery rights of employees, see Anderson, Helen, The Protection of Employee Entitlements in Insolvency: An Australian Perspective (Melbourne University Publishing, 2014)Google Scholar and her articles cited therein.
38 Corporations Act 2001 (Cth) s 471B. Note, however, the ability to seek leave from the court to commence proceedings despite the liquidation. This might occur where the remedy sought is not financial but rather an injunction against the failed company. See, for example, Commissioner for Consumer Protection v Unleash Solar (in liq) Pty Ltd [2015] FCA 348.
39 Corporations Act 2001 (Cth) ss 459C, 459G.
40 Ibid s 459P.
41 Ibid s 459A.
42 Ibid s 477
43 Ibid s 556.
44 Ibid s 181, s 182. See for example, the well-known breach of duty cases, Grove v Flavel (1986) 43 SASR 410 and McNamara v Flavel (1988) 6 ACLC 802.
45 Corporations Act 2001 (Cth) s 588G(1A).
46 Ibid ss 588R, 588T. Company creditors also have some potential to seek redress against solvent companies pursuant to s 1324, particularly in relation to share capital transactions under Chapter 2J of the Corporations Act 2001 (Cth).
47 Australian Law Reform Commission, Securing Compliance: Civil and Administrative Penalties in Australian Federal Regulation Discussion Paper 65 (2002) [2.15]. See also Mann, Kenneth, ‘Punitive Civil Sanctions; The Middleground Between Criminal and Civil Law’ (1992) 101(5) Yale Law Journal 1795, 1799.CrossRefGoogle Scholar
48 Corporations Act 2001 (Cth) ss 601AB(1A), 601AB(1), 1447. Companies deregistered annually outnumber companies in liquidation by approximately ten to one. For example, according to ASIC's annual reports, the total numbers of companies deregistered in 2012–13, 2013–14 and 2014–15 were 105 627, 109 147 and 112 714 respectively. In those same three years, the total numbers of companies entering some form of external administration (but not necessarily deregistered that same year) were 10 746, 9822 and 9177 respectively.
49 ASIC, Regulatory Guide 109: Assetless Administration Fund: Funding Criteria and Guidelines, RG109, November 2012.
50 Ibid RG109.5.
51 Ibid RG109.28. Data has been requested from ASIC about the extent to which AAF funding has been paid for asset recovery in phoenix circumstances, but at the date of writing, no response has been received.
52 Ibid.
53 The details are contained in the appendices to ASIC, Regulatory Guide 109: Assetless Administration Fund: Funding criteria and guidelines, RG109, November 2012.
54 Turnaround specialist are not covered by the regulations that govern liquidators.
55 See Australian Securities and Investments Commission v Franklin (liquidator), in the matter of Walton Constructions Pty Ltd [2014] FCAFC 85 (‘ASIC v Franklin’). ASIC v Franklin illustrates the operation of pre-insolvency advisors and the difficulties facing ASIC in tackling their behaviour directly. The case was a successful action brought by ASIC for the removal of a liquidator on the basis of apprehended bias. The liquidator was engaged by two failing companies through a referral by the pre-insolvency business advisory group of companies, and it appeared that the pre-insolvency advisors had engaged in phoenix activity (at [52]). The apprehension of bias arose because the group had previously made a number of referrals to the same liquidator, and ASIC alleged that the liquidator might not make the required ‘vigorous’ inquiries if this jeopardised future referrals of work.
56 See for example, the successful action brought by ASIC against Paul Scott and Graeme Dwyer, reported in the Sydney Morning Herald newspaper: Sally Rose, ‘Gold Coast accountant Paul Anthony Scott latest scalp as ASIC bares teeth’, The Sydney Morning Herald (Sydney) 20 February 2015.
57 See Australian Restructuring Insolvency and Turnaround Association, Code of Professional Practice, 3rd edition, <http://www.arita.com.au/about-us/arita-publications/code-of-professional-practice>.
58 Corporations Act 2001 (Cth) s 477.
59 This reporting is done in compliance with ASIC, Regulatory Guide 16: External administrators – Reporting and Lodging, RG16, July 2008. Available at <http://asic.gov.au/for-finance-professionals/registered-liquidators/applying-for-and-managing-your-liquidator-registration/rg-16-external-administrators-reporting-and-lodging/>.
60 ASIC, Annual Report 2014–2015 (15 October 2015) 36.
61 ASIC, above n 59, RG16.4.
62 Ibid RG16.5.
63 Australian Securities and Investments Commission v Midland Hwy Pty Ltd (administrators appointed); in the matter of Midland Hwy Pty Ltd (administrators appointed) [2015] FCA 1360, [78]–[79].
64 For a full survey of laws that might be utilised in the phoenix context, see Anderson et al, Defining and Profiling Phoenix Activity, above n 22.
65 Corporations Act 2001 (Cth) ss 206C, 1317G.
66 Ibid ss 206D, 206E. ASIC may also apply to the court for a disqualification order pursuant to Corporations Act 2001 (Cth) s 206E where a person has twice been a director of a corporation that has contravened the Act or has twice contravened the Act while they were an officer of a body corporate.
67 Ibid s 206F. This provision allows ASIC itself to disqualify for up to five years a person who, within the past seven years, has been an officer of two or more corporations where adverse liquidator reports have been lodged with ASIC.
68 Ibid s 489EA. ASIC may wind up a dormant company under s 489EA of the Corporations Act where it becomes apparent that it is not carrying on business, evidenced for example by the non-return of ASIC forms or the non-payment of fees. ASIC may then appoint a liquidator to wind up the affairs of the company.
69 According to ASIC, Regulatory Guide 242: ASIC's power to wind up abandoned companies, RG242, January 2013, ‘[w]e will exercise this power to help employees of abandoned companies who are owed employee entitlements to access an advance under the Fair Entitlements Guarantee Act 2012 (Fair Entitlements Guarantee Act).’, at 4. However, even in these circumstances, ASIC will not necessarily act: see RG242.12.
70 In 2014–15, there were 112 714 companies deregistered (ASIC, Annual Report 2014-2015 (15 October 2015) 66) of which 37 600 companies were abandoned companies which were deregistered by ASIC for failure to pay fees: Corporations Act 2001 (Cth) s 601AB. (Data supplied by email from Adrian Brown of ASIC to the author, 18 March 2016.) In the same period, ASIC applied for the winding up of 31 abandoned companies: ASIC, Report 444 ASIC's Enforcement Outcomes January – July 15, 29; ASIC, Report 421 ASIC's Enforcement Outcomes July to December 2014, 51.
71 For a discussion of the advantages of public enforcement in the context of directors’ duties generally see Jones, Renee and Welsh, Michelle, ‘Toward a Public Enforcement Model for Directors’ Duty of Oversight’ (2012) 45 Vanderbilt Journal of Transnational Law 343Google Scholar and in the context of the enforcement of securities law see Welsh, Michelle and Morabito, Vince, ‘Public vs Private Enforcement of Securities Laws: An Australian Empirical Study’ (2014) 14 (1) Journal of Corporate Law Studies 39.CrossRefGoogle Scholar
72 Black, Julia, ‘Critical Reflections on Regulation’ (2002) 27 Australian Journal of Legal Philosophy 1, 26.Google Scholar
73 Baldwin, Robert, Cave, Martin and Lodge, , Understanding Regulation Theory, Strategy and Practice (Oxford University Press, 2nd ed, 2012) 247.Google Scholar
74 Organisation for Economic Cooperation and Development, OECD Guiding Principles for Regulatory Quality and Performance (2005) 3 <http://www.oecd.org/dataoecd/19/51/37318586.pdf>.
75 Haines, above n 25, 8.
76 See generally Welsh, above n 6 for a discussion of the normative role of public regulation in the context of the enforcement of directors’ duties.
77 Richard B Macrory, ‘Regulatory Justice: Making Sanctions Effective’ (2006) <http://webarchive.nationalarchives.gov.uk/20121212135622/http:/www.bis.gov.uk/files/file44593.pdf> (‘Macrory Report’).
78 Ibid 7.
79 United Kingdom Department for Business Innovation and Skills, Private Actions in Competition Law: A Consultation on Options for Reform (April 2012) 45 [6.26] <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31528/12-742-private-actions-in-competition-law-consultation.pdf>.
80 Ibid 45 [6.27].
81 Ibid 46 [6.29].
82 Ibid 46 [6.31].
83 United Kingdom Department for Business, Innovation and Skills, Private Actions in Competition Law: A Consultation on Options for Reform – Government Response (January 2013) 53 [6.35] <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/70185/13-501-private-actions-in-competition-law-a-consultation-on-options-for-reform-government-response1.pdf>.
84 Parker, Christine and Nielsen, Vibeke Lehmann, ‘What Do Australian Businesses Really Think of the ACCC, and Does It Matter?’ (2007) 35(2) Federal Law Review 187, 192.CrossRefGoogle Scholar
85 See above n 47.
86 Ezrachi, Ariel and Ioannidou, Maria, ‘Public Compensation as a Complementary Mechanism to Damages Actions: From Policy Justifications to Formal Implementation’ (2012) 3 Journal of European Competition Law & Practice 536, 537.CrossRefGoogle Scholar
87 Hodges, Christopher, The Reform of Class and Representative Actions in European Legal Systems (Hart Publishing, 2008) vol 8, 196Google Scholar. Hodges states that ‘[l]aw and economics scholars have traditionally held that regulation and litigation are substitutes in the task of deterring potentially harmful conduct’: at 200, citing Wittman, Donald, ‘Prior Regulation versus Post Liability: the Choice between Input and Output Monitoring’ (1977) 6 Journal of Legal Studies 193.CrossRefGoogle Scholar
88 Although arguably greater stigma may be attached to a compensation order that is the result of a public enforcement action than a private enforcement action.
89 Hodges above n 87, 228.
90 Ezrachi and Ioannidou, above n 86, 537.
91 Ibid.
92 Ibid 538 (citations omitted).
93 See ASIC Act 2001 (Cth) s 1(2)(g) which provides that ASIC must strive to among other things ‘take whatever action it can take, and is necessary, in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers on it’.
94 Responsive regulation was developed and expanded by John Braithwaite and Ian Ayres. One of the tenets of responsive regulation is that the most successful regulators act strategically by selecting from their range of available enforcement mechanisms the one that is most likely to lead to future compliance. See, eg, Ayres, Ian and Braithwaite, John, Responsive Regulation: Transcending the Deregulation Debate (Oxford University Press, 1992)CrossRefGoogle Scholar; Braithwaite, John, To Punish or Persuade: Enforcement of Coal Mine Safety (State University of New York Press, 1985)Google Scholar (‘Punish or Persuade’). See also Fisse, Brent and Braithwaite, John, Corporations, Crime and Accountability (Cambridge University Press, 1993)Google Scholar; Dellit, Chris and Fisse, Brent, ‘Civil and Criminal Liability Under Australian Securities Regulation: The Possibility of Strategic Enforcement’ in Walker, Gordon, Fisse, Brent and Ramsay, Ian (eds), Securities Regulation in Australia and New Zealand (LBC Information Services, 1st ed, 1994) 570Google Scholar; Haines, Fiona, Corporate Regulation: Beyond ‘Punish or Persuade’ (Clarendon Press, 1997) 218Google Scholar. For a list of recent publications contributing to the responsive regulation debate: see Braithwaite, John, ‘The Essence of Responsive Regulation’ (2011) 44 University of British Columbia Law Review 475, 479Google Scholar n 9.
95 See above n 94.
96 Parker, Christine, ‘Restorative Justice in Business Regulation? The Australian Competition and Consumer Commission's Use of Enforceable Undertakings’ (2004) 67(2) Modern Law Review 209, 236.CrossRefGoogle Scholar
97 Macrory Report, above n 77, 15.
98 Ibid 27, citing Criminal Justice Act 2003 (UK) pt 12 s 142.
99 Ibid 10.
100 Ibid 31.
101 Ibid 28 (emphasis in original).
102 ASIC, Information Sheet 151: ASIC's approach to enforcement, above n 5, 4.
103 Ibid 5.
104 Ibid 6.
105 Explanatory Memorandum, Corporate Law Reform Bill 1992 (Cth) 31 [120].
106 Senate Standing Committee on Legal and Constitutional Affairs, Parliament of Australia, Company Directors’ Duties (1989) (‘Cooney Report’).
107 Ibid 190.
108 Ibid 80.
109 For example, the Australian Competition and Consumer Commission can seek compensation orders for victims of cartel behaviour under Competition and Consumer Act 2010 (Cth) ss 87(1A)(b), 87(1B). The Fair Work Ombudsman can seek compensation orders under s 545(2)(b) of the Fair Work Act 2009 (Cth). Similar powers are held by regulators in other jurisdictions. For example, the Financial Services Authority in the UK is able to apply for compensation orders and investigate and seize assets. Financial Services and Markets Act 2000 UK ss 382 and 383.
110 Explanatory Memorandum, Corporate Law Reform Bill 1992, [179].
111 Ibid [181]. This provision was removed by the Corporate Law Economic Reform Program Act 1999 (Cth). Under s 1317HB, the criminal court could make a civil penalty order. The 1999 amendments required ASIC to commence fresh proceedings to obtain a civil penalty order if the criminal prosecution failed: Explanatory Memorandum to Corporate Law Economic Reform Program Bill, [6.128].
113 For the details of sources searched and the methodology in collating information, as well as the results of our empirical research into phoenix enforcement by ASIC and other regulators, see Helen Anderson et al, Quantifying Phoenix Activity: Incidence, Cost, Enforcement, Centre for Corporate Law and Securities Regulation, October 2015, pts 1.3 and 4.
114 ASIC, Media Releases (1 January 2004 - 31 December 2014) <http://asic.gov.au/about-asic/media-centre/find-a-media-release/>.
115 ASIC, ‘Legal Adviser and Company Directors Found Liable in Relation to “Phoenix” Activity’ (Media Release, 09-174AD, 14 September 2009) <http://asic.gov.au/about-asic/media-centre/find-a-media-release/2009-releases/09-174ad-legal-adviser-and-company-directors-found-liable-in-relation-to-phoenix-activity/>. The case itself is Australian Securities and Investments Commission v Somerville [2009] NSWSC 934; ASIC v Somerville (No 2) [2009] NSWSC 998; [2009] NSWSC 1149.
116 Australian Securities and Investments Commission v Somerville [2009] NSWSC 934, [2].
117 Australian Securities and Investments Commission v Somerville [2009] NSWSC 934.
118 Ie, where the requirements of s 588G(1) are satisfied.
119 For an explanation of this provision, see Morrison, David, ‘The Addition of Uncommercial Transactions to s 588G and its Implications for Phoenix Activities’ (2002) 10 Insolvency Law Journal 229.Google Scholar
120 An exception is HWY Rent Pty Ltd v HWY Rentals (in liq) (No 2) [2014] FCA 449. It is also possible that the uncommercial transaction provision has been used by liquidators to threaten directors, and that the directors have contributed extra funds to the liquidation to forestall a recovery action. In some cases, funding for recovery litigation may be provided by the ATO when it is a major creditor.
121 Further instances of enforcement by ASIC, other regulators and liquidators are recounted in Anderson et al, Defining and Profiling phoenix activity, above n 22. See also Matthew, Anne, ‘The Conundrum of Phoenix Activity: Is Further Reform Necessary?’ (2015) 23 Insolvency Law Journal 116Google Scholar, which details the heavy emphasis placed by ASIC on administrative disqualification.
122 Anderson et al, Quantifying Phoenix Activity, above n 113, [4.2.1.4].
123 Corporations Act 2001 (Cth) s 206F. Note that disqualification by the court can also be sought by ASIC pursuant to s 206D.
124 ASIC, ‘ASIC Disqualifies Sydney Director’ (Media Release, 16-037MR, 18 February 2016) <http://asic.gov.au/about-asic/media-centre/find-a-media-release/2016-releases/16-037mr-asic-disqualifies-sydney-director/>.
125 Ibid.
126 In a similar vein, see Australian Securities and Investments Commission, ‘ASIC Disqualifies Melbourne Director’ (Media Release, 15-037MR, 7 December 2015) <http://asic.gov.au/about-asic/media-centre/find-a-media-release/2015-releases/15-370mr-asic-disqualifies-melbourne-director/> regarding John Paulding, whose insolvent companies lost over $3.5 million. ASIC's media release noted that he ‘[f]ailed to exercise his duty to act in good faith in the best interest of Paulding Constructions or for a proper purpose’ and he ‘[c]oncealed and removed assets of Paulding Constructions so that they were not readily realisable by the current liquidators.’
127 Welsh, above n 6, 233.
128 Ibid 237–38.
129 Ibid.
130 This ultimately unsuccessful application was issued against Fortescue Metals Group and Andrew Forrest: Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486.
131 Hodges, above n 87, 216.
132 ASIC, ‘Insolvency Statistics: External Administrators’ Reports (July 2014 to June 2015)’ (Report, REP 456, November 2015) table 10, 19.
133 ASIC, ‘ASIC Enforcement Outcomes: January to June 2015’ (Report, REP 444, August 2015) 4 [4].
134 Productivity Commission, Business Set-up, Transfer and Closure Productivity Commission Inquiry Report, Report No 75 (September 2015) 425.
135 See further SERC, Performance of ASIC, above n 8, chapter 17.
136 ASIC, Annual Report 2014-2015 (October 2015) 6.
137 Ibid 164.
138 Ibid 7.
139 Ibid 8.
140 Ibid 9.
141 Senate Economic References Committee, Performance of ASIC, above n 8, xvii.
142 Ibid 227–236.
143 Ibid [15.38].
144 Ibid [15.66].
145 Australian Government, Australian Government Response to the Senate Economic References Committee Report, ‘Performance of the Australian Securities and Investments Commission (2014) 9.
146 For example, Andrew Dunner (ASIC v Dunner [2013] FCA 872); Pino Fiorentino, removed by CALDB, (see ASIC, ‘ASIC Removes Liquidator from Industry’ (Media Release, 14-160MR, 8 July 2014) <http://asic.gov.au/about-asic/media-centre/find-a-media-release/2014-releases/14-160mr-asic-removes-liquidator-from-industry/>); and Stuart Ariff, jailed for six years, (see ASIC, ‘Stuart Ariff Jailed on ASIC Charges’ (Media Release, 1-308MR, 19 December 2011) <http://asic.gov.au/about-asic/media-centre/find-a-media-release/2011-releases/11-308mr-stuart-ariff-jailed-on-asic-charges/>) whose actions (and ASIC's response to them) prompted the Senate Economics References Committee's report into the regulation, registration and remuneration of insolvency practitioners in Australia (Senate Economics References Committee, Parliament of Australia, The Regulation, Registration and Remuneration of Insolvency Practitioners in Australia: The Case for a New Framework (2010)).
147 See discussion in Matthew, above n 121, 131–2. See also Tanzer, Greg, ‘Rise of the Phoenix: ASIC Campaign Focuses on Gatekeepers’ (2014) Law Society Journal 34, 34.Google Scholar
148 ASIC, Corporate Plan 2015-16 to 2018-19 (August 2015) 16–17. ‘Insolvency practitioners – review high-risk insolvency practitioners focussing on independence (including pre insolvency advisers), competence and improper gain (including remuneration) … Lodgement compliance – review systemic non compliance by insolvency practitioners with statutory lodgement obligations … Identify inappropriate conduct by assessing reports of misconduct and deciding whether we need to act further – we expect gatekeepers to report issues promptly so we can rectify problems with individual entities quickly and effectively.’
149 Senate Economics References Committee, The Regulation, Registration and Remuneration of Insolvency Practitioners, above n 146.
150 ASIC, ‘ASIC Regulation of Registered Liquidators: January to December 2011’ (Report, REP 287, 22 May 2012). ASIC, ‘ASIC Regulation of Registered Liquidators: January to December 2012’ (Report, REP 342, 1 May 2013); ASIC, ‘ASIC Regulation of Registered Liquidators: January to December 2013’ (Report, REP 389, 8 April 2014); ASIC, ‘ASIC Regulation of Registered Liquidators: January to December 2014’ (Report, REP 430, 16 April 2015).
151 ASIC, ‘ASIC Enforcement Outcomes: January to June 2015’ (Report, REP 444, August 2015).
152 See for example, ASIC, ‘ASIC Cancels Registration of Liquidators’ (Media Release, 15-224MR, 24 August 2015) <http://asic.gov.au/about-asic/media-centre/find-a-media-release/2015-releases/15-224mr-asic-cancels-registration-of-liquidators/24August2015>.
153 Fair Work Act 2009 (Cth) s 545(3), discussed above n 35.
154 Senate Economics References Committee, The Regulation, Registration and Remuneration of Insolvency Practitioners, above n 146, Chapter 6.
155 The first recommendation of the SERC in its 2010 report was that ‘the corporate insolvency arm of ASIC be transferred to ITSA to form the Australian Insolvency Practitioners Authority (AIPA).’ Ibid [11.9]–[11.10].