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There is no Official Trustee in Bankruptcy to take appointments by default: see s 160 Bankruptcy Act. One existing avenue, referred to earlier, is that ASIC itself may “order” that a company be wound up, under s 489EA of the Corporations Act, on broad criteria.
Liquidators appointed are paid an agreed fee by ASIC. ASIC may find it needs to exercise that power more, and pay more.
Comparable overseas jurisdictions – New Zealand and England – have government liquidators.
The removal of the concept of official liquidator is a significant move towards transparency in the allocation of costs in the administration of corporate insolvencies.
It would remain open for liquidators to take appointments “on spec”, with the good taken with the bad; or from some sense of professional obligation in a particular case.
The legislative removal of the position of official liquidator could therefore have these particular consequences: The law, the courts and ASIC will ultimately have to try to avoid a circumstance of there being no liquidator of an insolvent company.
It remedies a dysfunctional and opaque aspect of the funding of the corporate insolvency regime that has served to diffuse the its costs across the profession itself and those creditors receiving dividends from insolvent companies.
It may mean that government agencies, ASIC and creditors generally may now have to pay, or pay more, for the actual cost of services and benefits provided by liquidators.
The ILRA removes the position of “official liquidator” from the law of insolvency in Australia, under s 76 of sch 2 of the Act, thus also removing the long-standing obligation on official liquidators to take appointments to insolvent companies whether there are funds to pay for the liquidators’ services or not.Consequential repeals of the term in other sections of the Corporations Act follow, in particular s 472, which allows a court to appoint an official liquidator when ordering the winding up of a company.An official liquidator is a registered liquidator who assumes a professional obligation to consent to take on court appointed liquidations.While those lists no longer exist, the condition that ASIC has imposed for being registered as an official liquidator, is that an undertaking must be given “not to refuse consent to act as liquidator in a court winding up solely on the grounds that the company is assetless or appears to have insufficient funds” to pay the liquidator’s remuneration and expenses.Any refusal would, according to ASIC, be a ground for cancellation of registration.[iii]It is a position that is based on the fact that no government liquidator role exists in Australia, as there is in personal insolvency with the Official Trustee in Bankruptcy.