Mar 232011
 

Australian liquidators: For my free guide on final meetings and finalisation of a creditors’ voluntary liquidation, go to http://insolvencyresources.com.au/Checklists/checcvolliqFinaMeet_v3.pdf 

Any suggestions for change or improvement are welcome.

Mar 102011
 

 Australia’s Insolvency Practitioners Association (IPA) has told members to:

 “be aware that the sale of an asset of the insolvent company or individual may trigger a capital gains tax (CGT) liability.  The practitioner then needs to determine the status of that liability.  The law in relation to where CGT liability falls on the sale of an asset by an insolvency practitioner is not clear”.

 The warning appears today (March 10, 2011) on the IPA website.

 The issue of post-appointment tax debts has been highlighted on this blog as follows:

 o       Post-appointment income tax debts of liquidator (October 10, 2010)

o       Taxing capital gains made during liquidation (October 15, 2010)

o       Legal opinion warns external administrators about personal liability for company taxes (November 16, 2010)

The IPA’s complete statement reads:

“Capital gains tax – need for caution in insolvency administrations 

Insolvency practitioners should be aware that the sale of an asset of the insolvent company or individual may trigger a capital gains tax (CGT) liability.  The practitioner then needs to determine the status of that liability.  The law in relation to where CGT liability falls on the sale of an asset by an insolvency practitioner is not clear. 

For example, in the case of a controllership, the liability may be a liability of the company itself, or a personal liability of the controller. In the case of a bankruptcy, the CGT liability may fall on the bankrupt or become a liability of the trustee or simply be a post-bankruptcy debt. 

The IPA has been in discussions with the ATO for some time in an attempt to come to a correct position.  The ATO is yet to give its view or issue any ruling. 

The IPA will advise members of any developments in clarifying the legal position with the ATO.  In the meantime, members should be aware of this issue and take their own advice as necessary in relation to CGT liabilities in their administrations.

 Any questions, please contact us.”

It would be interesting to know what the IPA’s point of view is on this tax issue.  Presumably there is disagreement between it and the ATO as the two of them work together to “come to the correct position”.  More than likely the point of contention concerns the personal liability of external administrators.

Mar 022011
 

Paul Pattison –  the Australian liquidator whose own private company became insolvent – has voluntarily resigned from his company appointments and agreed not to take on any more until he demonstrates that he has the financial capacity to adequately and properly perform his duties as a liquidator. 

The announcement was made on 1 March 2011 by the Australian Securities and Investments Commission (ASIC), which applied on 7 February to the Supreme Court of Victoria for suspension of his license to practice. 

ASIC’s investigation into the conduct and affairs of Mr Pattison and two of his private companies is continuing.

In its media release ASIC states:

Following Mr Pattison’s voluntary resignation, ASIC yesterday obtained orders by consent in the Supreme Court of Victoria appointing new liquidators or deed administrators to 80 companies which were formerly administered by him.

Mr Pattison resigned as liquidator or deed administrator of those companies and gave an undertaking that he would cease to carry out, consent to, or otherwise accept appointment as a liquidator, provisional liquidator, voluntary administrator, administrator of a deed of company arrangement or controller, until he produces evidence in a form acceptable to ASIC or to the Court which demonstrates he has the practice and financial capacity to adequately and properly carry out his duties as a liquidator.

Yesterday’s consent orders follow the commencement of ASIC’s action against Mr Pattison and Pattison Business Recovery & Insolvency Specialists Pty Ltd (PBRIS) in the Supreme Court of Victoria.   On 7 February 2011, ASIC asked the Supreme Court to begin an inquiry into Mr Pattison’s conduct and his capacity to adequately and properly perform his duties as a liquidator.

Upon making the orders by consent, the Court ordered that these proceedings be otherwise dismissed.


No findings of impropriety as to the conduct of Mr Pattison as a liquidator were made.
  

ASIC’s investigation into the conduct and affairs of Mr Pattison, PBRIS and his former company, Pattison Consulting Pty Ltd, is continuing. ASIC will make no further comment on the investigation at this time.