The corporate regulator has banned one liquidator and accepted an enforceable undertaking from another, with one liquidator targeted after managing too many failed companies while the other was found to have failed to have carried out his duties as a liquidator.
The punishments serve as a lesson, one insolvency expert warns, saying businesses should always ensure they work closely with an insolvency practitioner to make sure everything is being carried out correctly and to the letter of the law.
“If you’re a small businessman or woman, if you’re looking to appoint a liquidator … it can become worse if you’re using someone who isn’t registered or just isn’t very good,” says Cliff Sanderson, founder and CEO of insolvency advisory firm Resolve.
It’s sound advice, but the Australian Securities and Investments Commission announcements yesterday are concerned with infractions of a different kind.
Liquidator Ian Struthers has agreed to a three-year ban after ASIC found he had not provided reports and documents for several external administrations, leading the regulator to say he had “failed to properly carry out his duties as a registered liquidator”.
The enforceable undertaking confirms Struthers did not provide remuneration reports to creditors in 17 of those administrations and in other cases did not provide information such as the costs associated with each major task required by him, along with a claim he lodged liquidator’s accounts that were not accurate.
Struthers cannot re-apply for registration for at least three years.
In a separate case, ASIC has cancelled the registration of Paul Anthony Pattison after he managed a number of failed companies. This comes after ASIC has already banned Pattison from managing corporations for four years last year.
“In a separate decision on January 21, 2013, Mr Pattison was by ASIC disqualified from managing corporations for four years following ASIC enquiries into three failed companies of which he was the sole director. These companies had combined deficiencies of over $4.7 million,” ASIC said in a statement.
ASIC also said the decision made last year to ban Pattison from managing corporations resulted in his bankruptcy.
Sanderson says while the two announcements are unusual, they serve as a warning for small business to always check the reputation of who they’re working with.
“It’s even worse if you go to an insolvency advisor who’s not a registered liquidator,” he says. “I compete with them and they’re dreadful.”
Jim Downey of insolvency specialists JP Downey and Co. told SmartCompany this morning SMEs should take the time to investigate the corporate reputation of whoever their chosen liquidator may be.
“It’s a small profession, and it wouldn’t take more than a couple of phone calls to find out anything.”