Bad Liquidator

In case you’ve missed it in the media, liquidators are bad (apparently).  I’ve provided details in a previous blog about ASIC’s supervision of liquidators.  I’ll disagree with the general proposition that liquidators are bad but there is a bad liquidator who has been brought down by ASIC and the Courts.  Check out below the details on that guy and some other ASIC actions against liquidators. Click Here To Read More

More records set – September insolvency statistics released

ASIC have recently released the insolvency statistics for September 2011. They reveal the number of corporate insolvencies in September 2011 is down slightly from August 2011 but it has still set a number of “highest ever” records for 2011. Liquidators in Tasmania and Western Australia are busy with further large increases in the number of appointments in those states.

The key statistics are:

• The number of companies entering some form of insolvency administration in the month of September 2011 was 991. That figure is down slightly from August 2011 which was 1,049.  And here is an interesting comparison – the insolvency number for September 2007 (so pre-GFC) was 557.

• The September insolvencies are the highest on record for a September and continues the trend for the calendar year with six of the nine months of 2011 being the highest ever for each of those months.

• The rolling year to September 2011 has seen 10,228 insolvencies which is the highest yearly total since records have been kept.

• Geographically, the bad news continues in Tasmania and WA this calendar year – Tasmanian insolvencies have increased 94% when compared to the average of the same period over the previous 5 years and WA insolvencies are up 71%.

Liquidators – in defence of ASIC’s supervision

ASIC has copped some stick regarding its supervision of liquidators during the last year or two.  And yes, there are some bad apples involved in acts ranging from fraud (thank you Stuart Ariff) to overcharging.  But not all liquidators are bad – most of us are quite decent! The most common complaint against liquidators is overcharging and at Dissolve we are trying to move those goal post as we do the vast majority of our liquidations at a fixed fee (yes, really). 

But I actually want to say a good word for the Regulator and its supervision of liquidators - ASIC really is quite active in supervising the insolvency profession.  Below is a long list of the care and attention us liquidators receive from ASIC.

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Insolvency Reform: Some good ideas and one clanger!

Last night, the Government released its Options Paper on Insolvency Regulation.  The main thrust of the reforms is to weed out rogue operators and reign in liquidators’ fees.  The Paper has a number of good proposals and one clanger of a bad one.  Firstly, the good ideas:

• Creditors being given the power to remove a liquidator by way of a vote rather than a Court application – seems reasonable to me;
• Measures to constrain liquidator’s fees including creditors being able to set a cap on fees and easier methods for creditors to object to fees - all reasonable and already largely applicable for liquidators that are members of the professional body, the IPA;
• Harmonisation of company and personal insolvency provisions – again, seems reasonable;
• Measures to encourage more price (fee) competition – At Dissolve we saw this one coming a long time ago, so we already conduct the majority of our new jobs on a Fixed Fee basis.

And the “Clanger”?  At present to become a Registered Liquidator an applicant must meet educational standards and have at least 5 years professional insolvency experience.  A proposed option to “expand the scope for insolvency entrants” is that a person be eligible for registration as a liquidator if the person is an Australian Lawyer or if they have an MBA and 5 years commercial experience – but this requirement would “also not require any minimum level of experience in performing insolvency administration tasks”.  So read that carefully…. if you are an accountant you need 5 years insolvency experience to apply to be a Registered Liquidator … but if you are a Lawyer or an MBA you can apply if you have 5 years commercial experience (read that as no insolvency experience!!).

If that option is accepted you can expect a rush of MBAs and Lawyers into the insolvency profession who have no insolvency experience.  That will certainly expand dramatically the competition amongst Liquidators and drive fees down  – unfortunately it will also lower professional standards dramatically and give ASIC a bundle more work in supervising, and disciplining, at least hundreds and perhaps thousands of new Liquidators.  If the objective is to improve standards and weed out rogue operators I am struggling to think of a worse option.

Cliff Sanderson
Registered Liquidator
Dissolve

Characteristics of a Good Liquidation Company

Deciding to put your business into voluntary liquidation is a difficult step for anyone to take. Such a decision will undoubtedly only come after a lot of soul searching and once all other alternatives have been explored. In such circumstances, it is likely that feelings will be running high. Choosing a liquidator that will act efficiently, professionally and sensitively is therefore absolutely essential; however it can be difficult to know where to start. We have put together a few ideas to help you focus on the most important issues when making this difficult choice.
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Avoiding Insolvent Trading Liabilities

If you have received a garnishee notice then you may have more to worry about then tax debts. In order to avoid trading while you are insolvent you need to be informed about the reality of your company’s financial situation. The most obvious way to avoid becoming insolvent is by operating a profitable and efficient business.

Living Beyond Your Means

Even if a business is profitable it may still be losing money because of waste or overspending on staff and infrastructure. Depending on the size of the company small changes can save thousands of dollars and possibly save a failing company. The easiest way to check if a company is in danger of being unable to pay debts is to see if it is spending more money than it is making.
There are ways to keep things in check long before there are problems, and this will also keep a board of directors in the know:
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How to Find the Right Liquidator

Deciding that it is time to put your company into voluntary liquidation is a big step, but it still leaves you with one big choice to make — whom to appoint as liquidator. We have put together a few ideas to help you focus on the most important issues when making this tricky decision.
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3 Tips for Choosing an Insolvency Practitioner

If you’re looking for help with a business having problems or threatened with impending financial issues, insolvency practitioners are definitely your best option. They can help you with anything from risky-looking business figures which threaten your bottom line to voluntary liquidation procedures. These are trained professionals able to analyze and assess business options and advise best practice solutions to avoid or mitigate insolvency. It’s important to know how to choose an appropriate advisory service with the skills and experience to deal with your particular issues.
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How an Insolvency Practitioner can Help Your Business

Insolvency is a real risk of doing business, and most business owners aren’t trained to deal with these issues. Many people in business aren’t even too sure what insolvency, liquidation or related matters really involve. It’s always advisable to get professional assistance in any situation where business viability is in question, and an insolvency practitioner can do a lot to clarify issues and find solutions.
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