Liquidator wins fight to obscure his name

With the help of a benevolent Tribunalist, a Sydney liquidator has foiled efforts by ASIC to identify him in a disciplinary committee decision which found he’d breached his independence obligations.

“At the interview the Applicant, on the advice of his counsel, was unwilling to answer questions seeking to test his understanding of independence requirements in the context of pre-insolvency advice. His counsel argued that it was fairer for the committee to simply rely on the fact that the Applicant had completed further professional education rather than re-testing his understanding.” ART General Member Michael Abood.

According to Administrative Review Tribunal (ART) General Member Michael Abood the liquidator, who is identified under suppression orders as FQGW, persuaded Abood that public admonishment wasn’t warranted.

“I find that on balance the dial moves ever so slightly in his favour,” Abood said in respect of the competing arguments brought by the liquidator and ASIC and reported last month in FQGW and A committee convened under section 40-45 of the Insolvency Practice Schedule (Corporations) [2025] ARTA 218.

The ART decision was handed down three years after ASIC first wrote to the liquidator querying the wisdom of accepting an appointment as liquidator of a company whose directors had previously retained the liquidator for the purposes obtaining Safe Harbour advice.

The circumstances were first brought to the regulator’s attention by the liquidator himself, who detailed the extent of his pre-appointment involvement in a DIRRI dated February 15, 2022.

Subsequently, further correspondence was exchanged. According to ASIC’s submissions to the ART the liquidator took overly long to accept his error, “parking” it until he’d concluded the liquidation, not that any reader should infer there was a favouring of remuneration over contrition.

Contrition there was. The liquidator sought to communicate with ARITA in respect of the association’s Code of Professional Practice (COPP) and the guidelines it lays down for members who’ve taken Safe Harbour engagements, guidelines which can be summarised as “… if a Member has provided advice to a company or the directors of a company which they intend to, or do rely upon, to avail themselves of the safe harbour provisions of the Corporations Act, the member cannot take a subsequent Appointment”.

Reading between the lines of Abood’s decision suggests the exchanges between the liquidator and ARITA were interrupted not only by illness but by general dissatisfaction on both sides.

“The Applicant, after enduring a period of illness, substantively responded in mid-August 2022 explaining that after some months of pursuing meetings with ARITA he had finally spoken to the CEO and a technical officer of ARITA to whom he had “outlined ASIC’s concerns and how we addressed them,” Abood said.

“The Applicant further explained that, having not heard back from ARITA as yet, “the ball is in ARITA’s court. However, I am closing my file.”

With nothing further emanating from the liquidator ASIC chose to issue a Notice demanding he demonstrate why he shouldn’t be referred to a disciplinary committee.

In December 2022, and after retaining Ashurst’s Colin Walrut and Aaron Kam, the liquidator fell on his sword, admitting he had erred but insisting there was no need to refer him to a committee because he had an unblemished record as a registered liquidator and bankruptcy trustee; had committed to completing the online ARITA Professional Standards Independence course and the CAANZ course on Ethics and Professional Standards and committed to completing formalised independence checklists prior to taking on future appointments and it was enough for ASIC, almost.

“ASIC responded on 28 March 2023 acknowledging the admissions of the Applicant and explaining that they would consider resolving the matter without referral if the Applicant were agreeable to providing Court Enforceable Undertakings (CEU) under ASIC’s Regulatory Guide 100 – Court enforceable undertakings,” Abood said.

“As is ASIC’s practice those undertakings would “be publicly disclosed by way of a media release (on execution and completion) and available via ASIC’s CEU register”. And there was the rub.

The liquidator could not bring himself to provide the CEU under the terms on offer. He was subsequently referred, and according to the Abood judgment declined at an interview with the committee to be tested on the matters at hand.

“At the interview the Applicant, on the advice of his counsel, was unwilling to answer questions seeking to test his understanding of independence requirements in the context of pre-insolvency advice,” Abood said.

“His counsel argued that it was fairer for the committee to simply rely on the fact that the Applicant had completed further professional education rather than re-testing his understanding.”

By this time the liquidator knew the Committee was not considering deregistration but that ASIC still wanted published proof of its regulatory work, something he continued to resist.

“During the interview the Applicant expressed his concern that any such publication would be “a black mark against my name for the rest of my life”, the Tribunal heard.

“His counsel went on to argue that in the context of the Applicant’s previously unblemished record when one weighed the “prejudice to the individual compared to the benefit to the public”, this was not a case that warranted publication of the Applicant’s name and the consequent damage to his reputation that would follow.”

In the end Abood sided with the liquidator and for good measure proposed “making an order under section 70 which will prohibit or restrict the publication or other disclosure of information tending to reveal the identity of the applicant”.