Liquidator Nick Crouch: wants to reform ARITA from the outside.
A curious document landed on SiN’s desk yesterday, one calling for wholesale reform of the Australian Restructuring Insolvency and Turnaround Association (ARITA).
The document was authored by Crouch Amirbeaggi principal Nicholas Crouch. He’s a former ARITA member and SiN understands the parting was not amicable.
In the document sent to 14 registered liquidators and barrister Geoff McDonald, Crouch proposes that ARITA offer its services to members at cost, pointing out “There’s currently approximately $2.5 million in cash in ARITA”. What that infers in the context of ARITA being a not-for-profit Crouch does not make clear.
He also suggests that ARITA should provide members with pro-forma documents to use as best practice standard reports and correspondence so as to end duplication and that “ARITA’s disciplinary process should be abolished and an assistance program be introduced instead.”
On the final point he also provided corroborating material by way of justification, citing ASIC saying 85 per cent of the issues it encounters in the supervision of liquidators are procedural.
“It follows that only 15% of ASIC compliance work is described as work that relates to deliberate misconduct of liquidators,” Crouch said.
“ARITA is uniquely placed to offer assistance to members to assist in the 85% of procedural matters. ASIC is ideally placed to continue to prosecute the 15% of deliberate misconduct matters.
“In summary, the industry would benefit from ARITA’s focusing its limited resources on assisting practitioners rather than prosecuting them. For the abundance of clarity, the objective of this correspondence is not to criticise ARITA,” Crouch concluded.
SiN was unable to source comment from ARITA chief executive John Winter, who was at the group’s state conference in West Australia, as far incidentally from last night’s gala dinner of the Turnaround Management Association’s (TMA) Asia Pacific Conference as he could get.
What kind of response Crouch is receiving for his proposition is at this point unknown. Five of the document recipients are not ARITA members and his passion for the role of ringleader might not be unqualified.
In the email to which the document attached he invited the potential co-conspirators to tell him he was wasting his time if that was what they thought, promising he would “go back to doing real work” if enthusiasm for a coup was absent.
Crouch doesn’t have the numbers as ARITA is controlled by the top end of town. ARITA is not interested in helping small practices from the abuse of the large practices against small practices. You have buckleys of getting a complaint against a large practice to be acted upon by ARITA. He is wasting his time since ASIC’s surveillance programme is directed against small practices and is made to drive them out of business. They would prefer that small practices didn’t exist.
Small practices serve a social purpose that will disappear when they no longer exist as the big end of town will not be interested.
The idea of universal pro-forma documents to which corporate insolvency remains wedded is good but this may only serve to further entrench what are limited technology offerings in that sector. Best practice standard reports may assist but these can serve to promote an undue focus on process over substance, evident in ASIC’s regulatory focus. Correspondence should not be templated, or at least should be readily variable.
Raising these ideas does highlight the potential, and need, for increased efficiency in insolvency administration. In my view this is “real work” that should be pursued. To describe this as conspiratorial reveals a poor view of what I find is a high level of forward-thinking in the profession.
I leave comments on ARITA’s discipline focus for others, but note the potential legal impact of the ILRA 2016 in bringing industry body co-regulatory processes under greater scrutiny.
Given this has been put out in the public domain, I would be interested to know if there is any ARITA response.
Of course under the ILRA model for discipline the procedure that was and is available under the Bankruptcy Act is being adopted also for matters involving corporations. Whether the use of the “Committee” process which really does not have any real transparency, will be an efficient outcome very much remains to be seen. What needs to be focused on is attention to discipline sooner rather than later so that when the “axe falls” too many people have not been injured: e.g. the Ariff saga
Good to see that ARITA seems to have reacted to Mr Crouch’s letter in saying that it is keeping its training costs for the September 2017 law changes “to a minimum” and that it will be “drawing on our reserves to return benefits to our members”. That may entail a suite of forms and procedures.
Meanwhile, the lawyers can read the new law and apply it.
This has now been elevated to a PJC Committee reviewing ASIC.
On 25 November 2016, Senator John Williams asked ASIC:
“With the new insolvency laws, every insolvency firm must update its precedents and templates. This is a massive and costly task. I know of a group of 40 independents, a small firm of liquidators. Small firms are creating one set of documents that they will all use as templates. It is an industry first. This will save ASIC work. Is ASIC prepared to work with this group to develop these templates?
Mr Price (ASIC): Certainly. We would be happy to discuss with groups that are thinking about that. Indeed, one of the industry representative groups for insolvency bodies, a group called ARITA, is looking at updating their forms in a similar fashion. We are having discussions with them as well”.
Good to see it moving.