ASIC winds up more abandoned companies to help employees

 ASIC, Corporate Insolvency, External administration, Insolvency Statistics  Comments Off on ASIC winds up more abandoned companies to help employees
Oct 262015
 

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
Source: ASIC Media Release 15-305MR, 21-10-2015

Company Name

State
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

Employees of 19 abandoned companies rescued by ASIC. Companies named.

 ASIC, Corporate Insolvency, Insolvency Law, Insolvency practices, Insolvency Statistics, Phoenix company activity, Regulation, White collar crime  Comments Off on Employees of 19 abandoned companies rescued by ASIC. Companies named.
May 152014
 

Since mid-2012, when the Australian Securities and Investments Commission (ASIC) was given the power to wind up companies that met certain criteria, ASIC has ordered the winding up of 19 companies.
 
In its media releases ASIC has estimated that those 19 companies have over $1.5 million in unpaid employee entitlements (wages, leave, etc.) owing to 100 workers.
 
As a result of the companies being wound up, those workers will be entitled to claim payment of their entitlements from the Fair Entitlements Guarantee (FEG) scheme administered by the Department of Employment.
 
The following chart lists the 19 “abandoned companies” wound up by ASIC. They are called “abandoned” because ASIC believes they are no longer carrying on business and that their directors have effectively walked away from them and their debts. abandon-companies

Background:

 
In July 2012 ASIC was given the power to order the winding up of a company in certain circumstances [Part 5.4C of the Corporations Act 2001] [Section 489EA]. In the lead up to this legislation the phrase “abandoned companies” was coined to describe such companies. Shortly after obtaining these powers ASIC decided that its primary consideration when exercising its discretion would be whether ordering the winding up of a company would facilitate employee access to funds from the government’s General Employee Entitlements Scheme (GEERS), since replaced by the Fair Entitlement Guarantee scheme (FEG). [ASIC Consultation Paper 180]. This objective had been the main reason behind introduction of the new law, which was part of the Gillard Government’s  Protecting Workers’ Entitlements package of April 2012.  A precondition for an employee of a company receiving a payment from GEERS/FEG is that the company be placed into liquidation.

Links:

ASIC media release 13-233MR “Workers to gain access to entitlements after ASIC employs new powers”  27 August 2013 ASIC media release 14-097MR ” ASIC wind-up actions enable access to employee entitlements”  6 May 2014