Dec 152014

Registered liquidators are aware that they are prohibited by law from giving, or agreeing or offering to give, someone valuable consideration with a view to securing their own appointment or nomination as a liquidator or an administrator of a company, or an administrator of a deed of company arrangement (section 595 of the Corporations Act 2001).

But I wonder how many of them would be aware that giving an assurance of support for a proposed Deed of Company Arrangement may be an inducement under section 595.

The Chief Justice of the South Australian Supreme Court, Chief Justice Kourakis, took this view in his judgment in the case of Viscariello v Macks [2014] SASC 189, handed down on 9 December 2014.

Mr John Viscariello, a company director, alleged that registered liquidator Mr Peter Macks, administrator of two of Mr Viscariello’s companies, wrongfully failed to negotiate and put in place a Deed of Company Arrangement which would have allowed the companies to continue to trade under a changed ownership structure.

There were several other matters adjudicated upon in this case, and in a sense the allegation that the administrator had given an undertaking to the director that he would support a certain Deed of Company Arrangement (DOCA) became secondary.

But the comments by Chief Justice Kourakis are intriguing.

Chief Justice Kourakis

Chief Justice Kourakis

Mr Viscariello alleged that Mr Macks made certain representations to him and Mr Fred Bart (a businessman and entrepreneur who was a prospective purchaser of the company’s business) in a meeting in November 2001 to the effect that if he (Macks) were appointed as administrator, he would cause the company to enter into a deed of company arrangement reflecting the terms in a Heads of Agreement document, refered to by His Honour as “the proposed Bart DOCA”.

His Honour said:

“I find it unlikely that Mr Macks would have given an unqualified assurance that he would support the proposed Bart DOCA in breach of his duty to investigate the financial circumstances of the Companies and provide opinions to creditors.” [Para 122 of judgment]
“It is inherently improbable that he would have made the unqualified representations pleaded by Mr Viscariello.”[Para.125]
“If the pleaded representations were made and an agreement or understanding reached to that effect, Mr Macks would have breached s 595 of the Corporations Act and both Mr Bart and Mr Viscariello would have procured him to do so.” [Para.128]
“It would be contrary to the public interest to allow Mr Viscariello to recover damages for a misrepresentation which arises out of a failure to give effect to an unlawful arrangement.
(Footnote 76) With respect to the false and misleading conduct alleged against Mr Macks in respect of the 27 November meeting with Mr Viscariello and Mr Bart, I reject Mr Viscariello’s evidence that Mr Macks gave an assurance that he would ensure that the Companies would enter into the Bart DOCA.” [para. 130](Emphasis added)

Footnote 76: Yango Pastoral Co Pty Ltd v First Chicago (Australia) Limited (1978) 139 CLR 410; Brownbill v Kenworth Trucks Sales (NSW) Pty Ltd (1982) 39 ALR 191; Alexander v Rayson [1936] 1 KB 169; McCarthy Rose (Milk Vendors) Pty Ltd v Dairy Farmers Coop Milk Co Ltd (1945) 45 SR(NSW) 266; Mason v Clarke [1955] AC 778.

Click here for pdf copy of judgment by Chief Justice Kourakis on 9 December 2014: Judgment in Viscariello v Macks [2014] SASC 18

Liquidator John David Adams passes away

 Industry People  Comments Off on Liquidator John David Adams passes away
Nov 032010

John Adams, a well-known Melbourne liquidator, passed away on 31 October 2010 at the age of 66.

In the years that I knew him well (1979 to 1984) John was a knowledgable and respected  liquidator with a professional approach combined with loads of business  nous and common sense.  Just as importantly he was also warm, generous and a lot of fun to be around. I will be forever grateful to him for having faith in me and giving me a start in public accounting and the insolvency profession when he was a partner at Parkhill Lithgow and Gibson, Chartered Accountants. 

Rest in peace JDA.

Insolvency Inquiry: Treasury’s Guide

 Australian Senate 2009-2010, Official Inquiries  Comments Off on Insolvency Inquiry: Treasury’s Guide
Aug 182010

In December 2009 the Australian Senate Economics Committee invited the Treasury Department to make a submission to its inquiry into liquidators and administrators. Treasury obliged in February 2010 by pointing the Senate Committee to some useful background material. A copy of  Treasury’s covering letter is produced below.  I have added a few comments to improve and update the internet links.  [The Committee subsequently questioned Treasury and requested more information. Copies of these exchanges will be included in a future post to this site.]

An overview of the relevant legal framework is attached for the assistance of the Committee.  There are a number of completed reviews and reports that deal with many of the issues encompassed by the Committee’s terms of reference. The Committee may find it useful to review these in the course of the Inquiry.

Corporate Insolvency Laws: A Stocktake

The Parliamentary Joint Committee on Corporations and Financial Services (PJC) released the Corporate Insolvency Laws: A Stocktake report in 2004. The PJC recommended that the Australian Securities and Investments Commission (ASIC) work with professional bodies to encourage the adoption of best practice standards for remuneration and the prompt disclosure of the basis of fees charged by liquidators and administrators. A copy of this report is available at: 

Review of the Regulation of Corporate Insolvency Practitioners

A review of the regulation of corporate insolvency practitioners was completed in 1997 (Report of the Working Party on the Review of the Regulation of Corporate Insolvency Practitioners, June 1997). The recommendations contained in the Report of the Working Party cover eight areas: 

  • regulatory system;
  • registering authority for insolvency practitioners;
  • registration requirements; discipline and remedial supervision;
  • general supervision; appointments and qualifications;
  • remuneration of insolvency practitioners; and
  • administrative requirements for controllers.

A copy of the Report is available on the Treasury website at:   

The following materials have also been issued by ASIC or by the insolvency Practitioners Association.

•             Guide to Fees of insolvency practitioners

•             Approving Fees: a Guide for Creditors

Copies of these documents can be downloaded from    NOTE BY pjk:  A more useful link is the following:$file/Approving_fees_guide_for_creditors.pdf 

Insolvency Practitioners Association  

The IPA Code of Professional Practice (The Code) addresses a range of matters dealing with the conduct of insolvency practitioners. This includes setting out a series of principles that should be followed in regard to practitioner. Included in the Code is a Creditor Information Sheet for approving remuneration in external administrations. A copy of the Code can be downloaded from  

Listed below are a number of remuneration and conduct related reforms passed or initiated in recent years. 

Corporations Amendment (insolvency) Act 2007

These amendments were the first significant change to Australia’s insolvency laws since 1993 and focused on improving outcomes for creditors, deterring misconduct by company officers, improving regulation of insolvency practitioners and voluntary administration. These reforms introduced the requirement for liquidators and administrators to complete Declarations of Relevant Relationships. Administrators are also required to complete Declarations of Indemnities. In relation to remuneration, there was a codification of principles and improvements in the information available to creditors and the Court. This included the Insertion of criteria into the Corporations Act for the Court to consider when assessing the reasonableness of an external administrator’s claim for remuneration.  

Personal Insolvency Reform

The Bankruptcy Legislation Amendment Bill 2009 was introduced in the House of Representatives on 28 October 2009. The Bill aims to provide a more streamlined process for fixing trustee remuneration and a more transparent process for reviewing remuneration. The Attorney‑General’s Department has released a discussion paper, Amendments to the Bankruptcy Regulations 1996: Remuneration of Registered Trustees, which is available at

 International resources and guidelines 

The Office of Fair Trading (OFT) in the United Kingdom has recently launched a study into Corporate Insolvency. The study will look at the market structure, regulation, remuneration and competition between firms and practitioners. Initially, this will involve collection and analysis of data from interested parties including accountancy and law firms, government, regulators and industry. Further investigations will depend on the results of the initial investigation. The OFT expect to complete their investigation by the end of 2010. Information regarding this study can be found at:

 Final report of OFT

 In April 2001 the World Bank released a detailed statement of principles and guidelines for effective insolvency and creditor rights systems:   


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