ACCC thinks (Administrator Appointed) is important

The Advanced Medical Institute Pty Ltd [ACN 117 372 915] and AMI Australia Holdings Pty Ltd [ACN 095 238 645] are under external administration.  Trent Hancock and Michael Hird, of accounting firm, BDO, Sydney, were appointed Joint Voluntary Administrators by Life Science Group Pty Ltd, a secured creditor of both companies, in December 2010.

The Australian Competition and Consumer Commission (ACCC) issued a media release on 15 June 2011 stating:

“Today, the Australian Competition and Consumer Commission obtained interim orders by consent against Advanced Medical Institute Pty Limited (administrators appointed) and AMI Australia Holdings Pty Ltd (administrators appointed) – collectively referred to as AMI.  In proceedings filed on Wednesday, the ACCC alleged that AMI failed to advise existing and potential clients that it is in administration, is insolvent and may not be able to provide goods and services after determination of the administration period.  The ACCC also claimed that AMI had wrongly accepted payments in advance for treatments when there is a real risk that AMI will not be able to continue to supply its treatments, and that clients will not receive refunds claimed by them, after the conclusion of its administration.

Today the ACCC obtained orders by consent that AMI will disclose to clients that: 

• AMI is in administration;
• AMI is, in the opinion of its administrators, insolvent; and,
• there is a real risk that AMI will not be able to continue to supply its treatments to patients and that patients may not receive refunds claimed by them, after the conclusion of its Administration.”   ….

“In these circumstances, the ACCC considered it vital to ensure that potential customers of AMI were clearly informed about the situation the company is in before they bought into any agreements,” ACCC chairman Graeme Samuel said.”

“This case underlines the fact that companies under administration are not exempt from their obligations under the Competition and Consumer Act.” 

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Speaking of statutory duties, section 450E(1) of the Corporations Act 2001 (“the Act”) stipulates that:

 “a company under administration must set out, in every public document, and in every negotiable instrument, of the company, after the company’s name where it first appears, the expression (“administrator appointed”)”. 

[There are virtually identical requirements in the Act that apply to companies where a receiver or controller has been appointed (section 428), or the company is in liquidation (section 541), or the company is subject to a deed of company arrangement (section 450E(2).]

Section 88A of the Act gives the meaning of the phrase “public document” of a corporation.  It appears to me to be wide enough to include an advertisement published on the internet by the corporation; and a website or blog published by the corporation.

Breaches of sections 450E(1), 428 or 541  are strict liability offences, meaning there is no requirement that the prosecution prove intention, knowledge, recklessness, negligence or any other variety of fault.

So it would be prudent for insolvency practitioners to ensure that the internet advertisements, websites and blogs of companies they control carry the required notice.