Insolvency and the law

THE Australian Securities and Investments Commission says it has improved its supervision of insolvency practitioners.

That’s a good thing, although cynics would say it was coming off an extremely low base, given revelations in recent years about Newcastle-based rogue liquidator Stuart Ariff. Despite many complaints over a long period by aggrieved clients and concerned citizens, Ariff remained largely unhindered until the chorus from his victims grew too loud to ignore.

While ASIC has undoubtedly lifted its game, most commentators on recent changes to rules governing insolvency practitioners appear concerned that too many loopholes remain for the overworked watchdog to adequately monitor.

ASIC appears determined to ensure fewer practitioners are tempted to enrich themselves outrageously at the expense of companies and creditors. But that has only ever been a part of the problem.

Less conspicuous but more insidious is the relatively widespread perception that unscrupulous company owners are routinely using insolvency laws to evade their obligations to creditors.

Even in a regional area like the Hunter, cases arise with distressing frequency in which major question marks appear over company failures.

It is a fact that company directors can choose their own insolvency practitioners when they decide to enter voluntary administration. It is also a fact that large sums are often earned by those practitioners in the course of administrations. Indeed, payment for the practitioner ranks higher than payment of creditors.

Rightly or wrongly, this may lead some to believe that practitioners may feel more kindly disposed to directors who bring them lucrative work than the creditors of those directors might wish.

This doesn’t sit well with accusations – sadly all too common – that administrators may sometimes be too generous in allowing voting rights for questionable debts.

Creditors often complain that some administrators sometimes seem slow to seek information about precipitate changes in directorships shortly before insolvency is declared. Or that creditors’ meetings sometimes seem scheduled for places that make it almost impossible for key creditors to attend.

ASIC’s increased attention to insolvency practitioners is welcome, but the commission should not be surprised if many creditors of insolvent companies remain unhappy with the state of the laws.

PRESERVING Newcastle’s history sometimes seems like a losing battle.

Vandals, spraypaint taggers and others seem seldom to rest from their destructive pursuits, while repairing the damage they do is painstaking and expensive – when it is possible at all.

The attack on the old sandstone fountain in King Edward Park is a cruel blow. Erected as a drinking fountain next to the railway station in Scott Street in 1879, the fountain was moved in 1888 after reticulated water became available in the city.

Novocastrians who value their city’s past will be shocked by this stupid vandalism.

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