Some directors of insolvent companies abandon their companies rather than adopt the proper course, which is to put the company through formal liquidation under the Corporations Act.
The Australian Securities and Investments Commission (ASIC) recently (21 October 2015) published a list of the latest abandoned companies that it has placed in liquidation under the special powers provided in section 489EA of the Corporations Act 2001. This brings to 60 the total of such company liquidations.
Were it not for special powers given to ASIC, abandonment of a company would cause employees who had not been paid their wages, leave and other entitlements to miss out on the compensation administered through the Australian Government’s Fair Entitlements Guarantee scheme (FEG), because such financial assistance is only available to employees of businesses that have gone into liquidation (or bankruptcy in the case of non-corporate employers). So putting an abandoned company into liquidation gives unpaid employees access to the FEG compensation. Unpaid employees of an abandoned companies can submit a request to ASIC to wind up the company.
The latest group of 10 abandoned companies owed at least 15 employees a total in excess of $429,000 in employee entitlements. They are:
LATEST LIST OF ABANDONED COMPANIES
|Adelaide Commercial Furniture Pty Ltd||SA|
|JBKM Ventures Pty Ltd||QLD|
|New Energy Technologies Pty Ltd||NSW|
|Rifam Pty Ltd||VIC|
|Let it Rain Pty Ltd||NSW|
|Focus on Training Pty Ltd||VIC|
|YQ Trading Pty Ltd||NSW|
|Parklane Building Corporation Pty Ltd||NSW|
|Sureline Training Services Pty Ltd||WA|
|Australian Veterinary Hospitals (South Australia) Pty Ltd||NSW|
Apart from the names of the liquidators appointed, this is the only information supplied by ASIC. (The “corporate veil”, or something like it, seems to require that the identity of the company directors be kept confidential.)
As to the costs per company, ASIC said in January 2013:
“The cost of taking winding-up action is generally estimated to be about $15,000. This figure comprises ASIC’s costs and the liquidator’s remuneration.” (Reg Guide 242)
One can only hope that the liquidators are recovering company assets to pay the liquidation costs, or that the directors are penalised in some way for making taxpayers foot the bill.
The 60 abandoned companies wound up by ASIC since 2013 owed a total of 213 employees more than $2.9 million in entitlements.
END OF POST