An Adelaide-based liquidator has had its registration cancelled by the corporate watchdog after concerns over its insolvency practice.
Daryl Charles Emmerson, principal of accounting firm the Chancellor Group, requested his registration be cancelled after the Australian Securities and Investment Commission raised concerns about his practice and his conduct of an external administration for a company formerly known as JB Electrical Contracting Pty Ltd.
As well as having his registration cancelled, Emmerson is also required to give one month’s notice should he at any stage seek to re-register as a liquidator.
The questions over his handling of the external administration surround the adequacy of the remuneration disclosure, independence disclosure, documentation regarding investigations and securing assets in a timely manner and other documentation.
In a statement, ASIC Commissioner John Price said ASIC will continue to crack down on insolvency practitioners when it comes to compliance issues.
“Where we see instances of liquidators not having adequate systems and processes in place, not complying with disclosure obligations, and lacking documentation, ASIC will continue to act to ensure the standards of the industry are maintained,” Price said.
Jennifer Dickfos, lecturer in business and corporations law at Griffith University, told SmartCompany while her initial thoughts on seeing ASIC’s action were “not again, another liquidator registration being cancelled”, she thinks it is ultimately good news.
“I think it’s a good thing, basically it’ saying the system is working, that ASIC is investigating and… that there are repercussions,” Dickfos says.
“The person is being taken out of the industry for a number of years and can’t wreak further havoc.”
Dickfos says it is intriguing that Emmerson had requested the cancellation himself.
“I’d want to know what his motivation was in doing that, I’d say that’s unusual,” she says.
Dickfos believes Australia is starting to mirror a tendency towards the greater “cleaning up” of the insolvency industry that is occurring in the UK.
But she says while it is important to ferret out practitioners that are not meeting obligations, she believes there are a lot of good operators.
“The industry is not full of bad people,” she says.
“I meet various IPs [insolvency practitioners] in the work I do, they’re not all bad apples.”
Dickfos says many people blame ASIC but to some extent there needs to be more responsibility placed on creditors.
“When you look at these cases, there have been people complaining but complaints have gone unaddressed,” he says.
“For creditors as a whole, especially unsecured creditors, I think they have a responsibility to do something in some form.”
Dickfos also says there is a need for more education for those dealing with insolvency practitioners, including businesses and the general public.
“I think there’ s a real need in terms of educating the creditors and the general public, who might become creditors, about what an IP really does, the role of them,” she says.
“ASIC relies on them to investigate them, especially if directors are at fault.”