Yesterday the Supreme Court pass down a Judgement on an ASIC application to have a judicial enquiry into the behaviour of two liquidators. The Judgement is scathing, not of the liquidators but of the applicant ASIC.
The first and obvious point was the duration that the process took and whilst the Judge apologised for his own delay it was the 8 – 9 years between the incidents and the court application that he focused on. Subsequently, much of the rest of the decision relates to the manner in which ASIC conducted itself before and during the hearing.
What it publishes to the world however, is the utter disarray in which the insolvency industry is being managed at present with limited constructive communication between most of the parties. ASIC has made it clear that it sees the (majority of) liquidators as the crook, and if you don’t believe me see the case study at: https://asic.gov.au/for-business/small-business/closing-a-small-business/illegal-phoenix-activity/#example
To further ensure that there point is driven home they have established a select panel of fifteen with whom they intend to work closely with, the relevant names can be found on the ASIC website. Funnily this is a behaviour very reminiscent of the banks who have long worked with small and very select panels for years. The revelations of the Royal Commission can offer some insight why one might only want to trust smaller groups. Meanwhile the remaining 703 (or there about) liquidators live in fear that one of the chosen ones will be thrust over them on a mission that could be as equally poorly prepared as the case mentioned above was!
Again the word phoenixing came up in this matter and the Judge went to great lengths to point out that the actions by ASIC (and the regulators) were falling short of achieving anything. In fact that some of ASIC’s expectations were in fact not even supported by legislation! There are some very serious people (and they are criminals) who have worked out that because of the way we write laws in this country it is very easy to use those laws to make lots of money. The child care scam revealed yesterday is but another example of such behaviour.
The Judge even took the time to challenge ASIC’s logic in the application of the term “Phoenix”, he could not see the theoretical assets that were transferred. In his view it was more an issue of Insolvent Trading. The problem is that certain parties utter the words “phoenix operations” with a mystical belief that everyone in the room will suddenly automatically be deemed criminals. The doctrines of ‘mens rea’ and ‘actus reus’ are slowly being pushed under the carpet so that they do not have to be considered.
One day maybe we will unite, form a genuine and collaborative bond, agree to write laws that are clear, precise and easily understood by all and thus easy to regulate. It will be a huge improvement for business, the economy and the country.
In the interim the world will no doubt see more entertaining judgements like this one. The sad part about it though is that with the ASIC devised funding system we liquidators get to pay for this sort of punishment ourselves. At least in this case the two liquidators have shown us how to get some of our money back, … ‘ASIC gets to use our money to pay their costs!’