ASIC acknowledges liquidators' belated fall

RECENT hip surgery hasn't slowed Adrian Brown and today a fresh pair of scalps has been formally acknowledged as having fallen foul of the ASIC insolvency chief's continuing compliance jihad.

In a media release ASIC announced it had extracted enforceable undertakings (EUs) from Sydney-based registered liquidators, Peter George Burton and Brian Hugh Allen after a review of various external administrations found the Neutral Bay-based pair had failed to adequately and properly discharge their duties.

The EUs effectively ban Burton and Allen from reapplying to be registered as liquidators for five years but in reality the two had voluntarily walked the plank well before today.

Allen formally requested ASIC to cancel his registration as an official and registered liquidator back on March 16, 2015.

According to Burton's EU he stopped practicing in December 2015 but unlike Allen, there is no indication that he formally requested ASIC cancel his tickets.

Bruck probe puts Needham and Taylor fourth

HLB Mann Judd's Andrew Needham

THE politically-charged liquidation of Bruck Textile Technologies (BTT) has catapulted HLB Man Judd partners Andrew Needham and Barry Taylor to number four on the list of Assetless Administration Fund (AAF) recipients.

Since December 2014 Needham and Taylor have received $499,647.50 in AAF monies to fund their investigations into BTT's controversial restructure, which took place prior to their appointment by creditors voluntary liquidation on July 11, 2014. 

Half a million in AAF monies is of course well shy of the $730,000 extracted from ASIC by Storm Financial liquidators Ivor Worrell and Raj Khatri, who hold top spot on the AAF list. But in the life cycle - or death spiral - of BTT, potential remains for Needham and Taylor to apply for more.

Meanwhile Needham and Taylor are closing in on the other front runners. In second place is Deloittes' David Lombe, John Greig and Richard Hughes, whose handling of the fraud-riddled Kleenmaid liquidation required more than $600,000 in AAF grants. Not far behind is PwC, which wrangled $560,000 to assist with the byzantine Westpoint Group liquidation. 

Needham and Taylor's most recent grant 

When contacted Needham was quick to point out that the single largest sum to come out of his AAF grants to date is $200k paid to lawyers Henry Davis York and barrister Peter Kulevski, who conducted the public examinations of BTT's directors and others. (See: Bruck scrutiny attracts funds from ASIC and FEG)

Bruck scrutiny attracts funds from ASIC and FEG

BTT director Philip Bart 

Photo: SiN Images

ASIC and the Department of Employment's (DoE) Active Creditor Program are for the first time simultaneously funding liquidators in a bid to unpick the 2014 restructure of Bruck Textiles Technologies (BTT).

BTT was wound up by a creditors voluntary liquidation (CVL) initiated by its shareholder, Australian Textile Group (ATG) on July 11, 2014. HLB Man Judd's Andrew Needham and Barry Taylor were appointed joint liquidators.

A day earlier, a newly incorporated and related entity, Australian Textile Mills Pty Ltd (ATM), purchased BTT's assets and $11.247 million in net liabilities for $1. The assetless BTT shell was left owing almost $4 million in employee entitlements.

ASIC's head of insolvency practitioner regulation, Adrian Brown told SiN that the government was onto the matter immediately.

"ASIC and the DOE have worked together on the Bruck Textiles matter from the first day of the liquidators' appointment," he told SiN.

"ASIC liaises closely with the DOE concerning its program and our AAF. This way, we can collaborate to determine how best to enforce the law (ASIC's role) and recover FEG (Fair Entitlements Guarantee) advances for the Commonwealth.

Needham and Taylor entered into a funding agreement with ASIC in December 2014 after advising in their August 5, 2014 report to creditors that the BTT directors "may be guilty of an offence under section 596AB of the Corporations Act".

It should be noted that no such finding has been made against BTT's directors. Director and Bruck Group owner Philip James Bart told SiN late last month he had provided all information necessary to demonstrate that the statute had not been breached. He declined to respond to questions submitted in advance of publication, quoting legal advice.

Hathway blasts ASIC statement on VU

Helm Advisory's Stephen Hathway
Photo: SiN Images

HELM Advisory founder Stephen Hathway was in a somewhat indignant state when SiN called last night to get the skinny on his recent brush with the compliance cops.

Around midday yesterday ASIC released a statement advising that Hathway had given the regulator a voluntary undertaking (VU) to implement firm-wide training at Helm Advisory, the firm Hathway founded in October last year after being axed from SV Partners.

Since SiN broke the story of his departure from SV in September, it's been unclear what caused the falling out between Hathway and SV managing director Terry Van Der Velde. But an unfavourable ASIC compliance review that could be laid at Hathway's feet might explain it.

When contacted, Hathway was more interested in attacking the wording of ASIC's press release, pointing out that despite the compliance failures identified taking place while he was at SV Partners, the ASIC statement makes no mention of his former firm.

"This is appalling because the firm (Helm Advisory) only started in October (2015) and the offences that've been represented in this report were all related to SV Partners," he said.

"I think it's a terrible misleading statement by ASIC but I can't do anything about it."

Asset freezing proceedings dismissed by consent

Jarrod Siorecki: Obtained
freezing orders against a
former director. 

Insolvency Guardian managing director Jarrod Siorecki has chosen not to pursue asset freezing orders against the former director of Insolvency Guardian Melbourne.

Siorecki sought an urgent ex-parte hearing before Justice James Edelman late on Monday, February 8, 2016 and was granted freezing orders the following day. But on March 11, the judge ordered the proceedings be dismissed by consent.

Initially Justice Edelman had made orders against Philip Anthony Carlei, formerly Insolvency Guardian Melbourne's director and Zuppa Soup Kitchens Pty Ltd, a company controlled by Carlei, freezing assets to the value of $400,000. 

It should be noted that at the time of the application Carlei had not had an opportunity to respond to Siorecki's allegations, which are outlined in a judgment attached to the orders. 

Carlei's Linked In profile lists his most recent employment as being an area manager for Baker's Delight. There are also references to stints at RSM Bird Cameron and Hall Chadwick but no mention of Insolvency Guardian Melbourne.

Former Insolvency Guardian Melbourne
director Phil Carlei

Nor were the allegations tested. SiN heard from Victorian sources that Carlei was overseas. 

Carlei was a contractor who began working as the sole representative of Insolvency Guardian Melbourne in February, 2014.

In January 2015 he was made a director of Insolvency Guardian Melbourne. From that point he was to be paid 50 per cent of the fees charged by Insolvency Guardian to all clients he introduced to the organisation. Then in mid-December 2015 Carlei told Siorecki that he intended to resign.

The announcement came about a week after Siorecki decided - on December 9 - that Insolvency Guardian Melbourne would cease trading because: "The Melbourne office did not reap the same financial rewards as the Brisbane office".

Why ASIC's gunning for Victorian liquidator

ASIC wants Ross McDermott
deregistered

ASIC's pursuit of a Federal Court inquiry into Ross McDermott is focussed on determining whether the Victorian insolvency practitioner (IP) faithfully fulfilled his obligations in terms of his duties and entitlements across 26 companies.

However apart from listing the 26 companies across four schedules ASIC's originating process doesn't give much away. The inquiry sought falls under under Sections 536 and 477 of the Corporations Act and ASIC wants orders banning McDermott from holding the position of registered and official liquidator for as long as the court sees fit. McDermott told SiN this week he did not want to comment at this time.

The regulator also wants him removed from his role as either liquidator, voluntary administrator or deed administrator of the 26 companies listed in the four schedules. If the inquiry supports ASIC's application an IP in the regulator's good books could pick up a ton of work.

Beyond that though, there's not much detail. The matter is due to return to the Federal Court on April 8, 2016. However a clue as to why McDermott's been targeted can be found in a judgment handed down in the Victorian Supreme Court in 2013.

In Ross John McDermott V Conalpin Pty Ltd and Dolmear Pty Ltd, Victorian Supreme Court judge John Efthim rejected an application by McDermott seeking to have his remuneration as liquidator of Conalpin Pty Ltd and Dolmear Pty Ltd approved. Both companies - which were the defendants in McDermott's application - are listed in ASIC's schedule of 26.

ASIC eyeing VA over 3D Printing Group

MACKAY Goodwin's Domenic Calabretta has told SiN he had no idea ASIC was investigating the administration of 3D Group Pty Ltd, a Victorian-based 3D printing technology outfit.

Currently overseas, Calabretta expressed surprise when told that 3D Group - which he controlled first as voluntary administrator and then as administrator of a Deed of Company Arrangement (DoCA) - was being investigated by an ASIC specialist stakeholder team.

"In regards to the alleged ASIC investigation ... I have not been made aware of such investigation," Calabretta said.

"The creditors in 3D have been paid out 100 cents in the dollar. The reason the creditors were paid so high was due to a successful Deed of Company Arrangement and subsequent Creditors Trust.

"The alternative for creditors would have been a return between 0 and 9 cents in the dollar, which would have been catastrophic for the creditors - hence the formal restructure conducted by Mackay Goodwin provided an excellent result," Calabretta said.

ASIC refused to comment when contacted on the basis that it never comments on "operational matters".

SiN is aware that ASIC has been looking at 3D Group since last year but it is not known if it has concluded its investigations or if it has made any findings.

Tidbits from the Transcripts - construction inquiry to receive list of suspect liquidators

Senator Doug Cameron will soon have a list of liquidators
connected to repeated construction sector failures.

A list of liquidators of interest is to be delivered to the Senate References Committee's inquiry into insolvency in the construction industry.

At the inquiry's final public hearing in Canberra, senior officials from the Department of Employment told chief inquisitor Senator Doug Cameron how as part of administering the Fair Entitlements Guarantee scheme (FEG), they gathered intelligence about individuals who preside over entities which repeatedly collapse with insufficient assets to pay employee entitlements.

Included in that intelligence are the names of those liquidators who consistently appear as the suspect directors' preferred appointees.

"Every six months FEG provides a list of data to ASIC that includes the case names, the amounts paid, the directors' names and the liquidator's names," FEG branch manager Sue Saunders told the inquiry.

"Every six months we provide data to the ATO that is more specific to the phoenixing agenda in the sense that it provides the names of every case and every director where the same director has been listed for more than one case under FEG.

"The information we gather about the cases that become insolvent and leave unpaid employee entitlements to be met under GEERS or FEG is useful intelligence to feed into the other range of information the ATO and ASIC are collecting that builds their risk profile around certain operators in the industry," Saunders said.

Tidbits from the transcripts - Cameron slams liquidators at construction inquiry

Labor Senator Doug Cameron

IT is SiN's opinion that the term 'farcical' might just creep into the general discourse around a senate inquiry when much of a session is dominated by the inquiry's architect busting attendee's testicles.

The session in question took place when the Senate Economics References Committee's Inquiry into Insolvency in the Construction Industry rolled into Sydney recently.

Leftwing Senator and unionist Doug Cameron, who is driving the inquiry, did the busting; Senator Sam Dastyari acquitted himself as chairman except when walking around with his shirt hanging out discussing travel arrangements with staff; South Australian Senator Sean Edwards mostly listened and Senator John 'Wacka' Williams didn't show.

Those subjected to Cameron's McCarthyist fervour included a pair of execs from credit reference agency Veda Advantage, the chief executive of the Australian Restructuring Insolvency and Turnaround Association (ARITA) and various commissioners and deputies from the Australian Securities and Investments Commission (ASIC) and the Australian Tax Office (ATO).

The inquiry is focussed on addressing phoenix activity in the construction sector, which has been estimated to cost the economy as much as $3 billion annually and Cameron told ARITA chief executive John Winter that liquidators are a big part of the problem.

Ex-liquidator avoids incarceration

Ex-liquidator Geoffrey Stewart Turner has avoided gaol time after a magistrate last week handed down a raft of suspended sentences in the NSW Local Court.

Turner pleaded guilty to 11 counts of dishonestly obtaining financial advantage by deception and two counts of obtaining money by deception on July 15 this year. Each count carries a two year term of imprisonment.

Last Friday Local Court Magistrate Joanne Keogh suspended the custodial component of each sentence, ordering instead that Turner enter into a good behaviour bond for a period of two years.

The charges followed an investigation by the Australian Securities and Investments Commission (ASIC) which found Turner failed to carry out his duties as a liquidator after reviewing 60 external administrations as part of its proactive liquidator compliance program.

The ASIC investigation saw Turner deregistered as a liquidator in late 2012 after entering into an enforceable undertaking with ASIC. Among other things the EU required him to request ASIC cancel his liquidator's registration.

According to the EU, Turner must never apply to be re-registered as a liquidator and never perform duties or functions that are the exclusive preserve of registered liquidators.

Shrinking insolvency division no threat to supervision: ASIC

Ex-ASIC insolvency team
member John Laird  

THE corporate regulator has rejected suggestions that its capacity to police the insolvency profession is diminishing, despite the departure of two senior insolvency team members in recent months and an almost 20 per cent reduction in insolvency division staff since 2011.

Neither John Laird or Marc Robinson would comment on their departures from the Australian Securities and Investments Commission's (ASIC) insolvency unit when contacted this week. Laird invoked confidentiality constraints. Robinson did not respond to a request for comment.

Sources told SiN that Laird, who according to his Linked In profile led the unit's investigations on major corporate collapses, is setting up his own consultancy.

Robinson, a senior insolvency specialist, is said to be headed to the Australian Tax Office (ATO) to work as a law interpretation specialist on its cross-agency task force combatting illegal phoenix activity.

If the most recent figures are accurate, the departures of Robinson and Laird leave ASIC with 21 insolvency team members monitoring almost 700 registered liquidators. That's about 33 liquidators per staffer and is representative of a trend of declining staff numbers within the division charged with the supervision of registered insolvency practitioners.

ASIC's 2010/11 annual report stated that there were 28 insolvency division staff regulating 670 registered liquidators. In 2011/12, staff numbers were reported as 24. Liquidator numbers meanwhile had risen to 680.

Tax Commissioner continues campaign against rogue SMEs

Recent ATO winding up activity
Chart courtesy Insolvency Notices

THE Commissioner of Taxation's campaign to cull recalcitrant non-compliance from the Small-to-Medium Enterprise sector (SME) is continuing at near record levels, with more than 450 company winding up applications lodged with the courts in June.

While less than the record 556 wind-ups filed in May, the June numbers still dwarfed the ATO's previous monthly record of 361 applications - filed in August 2013 - and take total winding up applications initiated by the ATO to more than 1100 in two months. Prior to May 2015, the ATO's monthly average was 92.

"The activity by the ATO is still very substantial," said Jamieson Louttit, who produces analysis based on insolvency notices lodged with the Australian Securities and Investments Commission (ASIC).

"They are way higher than average and I do think it's reflective of the Government being short of cash," he said. "While the ATO winding up notices have come off a bit, there's still significant pressure being applied by the ATO issuing director penalty notices (DPN) and garnishee notices," Louttit said, though he had no hard numbers for DPNs and other actions at the sharp end of enforcement.

"They are not published anywhere," he said. "I tried Freedom of Information and was told I'm wasting my time."

The ATO declined to provide specifics on DPNs and garnishee orders when contacted by SiN. "In 2014-15, we supported small businesses by providing over 500,000 payment arrangements that allowed them to manage their tax debts," the regulator said.

"During the year, there were about 1,000 ATO-initiated small business wind-ups, however, we did have a greater focus on legal action in the second half of the 2014/15 year and filed about 1200 wind up actions in this period."

EXCLUSIVE: Taxman's May wind-up blitz a record

THE Australian Taxation Office (ATO) issued more wind-up notices in the month of May than in any given month since July 2012, figures obtained exclusively by Sydney Insolvency News (SiN) show.

The ATO numbers - collated from company wind up activity initiated by the offices of state revenue, workers compensation insurers, ASIC, the ATO and non-government sources - show the ATO filed 556 applications to wind-up non-compliant companies last month. From all sources, the number of wind-ups filed in May reached 722, also a record for the period.

                                                     Courtesy Insolvency Notices

According to Insolvency Notices, produced by Jamieson Louttit & Associates, the next busiest month was August 2013, when the ATO issued 361 notices out of a total of 624.

"If you look at the ATO's annual reports and work out the averages, the number of wind-ups the ATO has filed in May 2015 represents more than half the annual average," Louttit said.

The ATO's annual report for the year to June 30, 2014 shows that since 2009/2010 the taxman has initiated wind-up action an average of 1,103 times per annum. That indicates a monthly average of 92 wind-up applications.

"If you look at the red line on the graph, there's been a significant uptrend by the government to push insolvencies," Louttit said.

"There's a positive in this in that if they are cleaning the system out of people who aren't paying their taxes then it gives everyone the ability to do business with someone who is compliant with the laws."

In March 2015, ATO commissioner Chris Jordan flagged the ATO was taking a tougher stance against non-payers. And Louttit said wind-ups by the ATO and other statutory agencies this month could equal May's record number.

"If you look at the statistics for June, the applications to courts already banked up suggest it's probably going to be the same amount," he said. "It's being increased significantly and it's the SMEs being hit."

Louttit said applying to wind-up non-compliant companies generally results in half of those companies being placed into liquidation while the other half finally pay their outstanding bills.

The ATO has begun working harder to recover billions of dollars in taxes SMEs have failed to pay after conciliatory strategies to debt recovery saw tax debt grow, both in terms of total amount owing and the length of time the debt had been outstanding. See: EXCLUSIVE: ATO in debt assault on SMEs

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Chapter 11 - Tough choices confront trade creditors when a retailer faces bankruptcy

Dan A Lowenthal. Partner and specialist attorney,
Patterson Belknap, Webb & Tyler LLP.

Following the inquiry into the performance of ASIC, the Senate Economics Reference Committee released its report in June 2014. Among other things the committee recommended that government instigate a review of current insolvency laws.

Recommendation 61 of the Senate report called for the review to look at the potential for incorporating elements of America's Chapter 11 bankruptcy reorganisation provisions down under.

The government's new assistant treasurer Josh Frydenberg told SiN through a spokesman this week that those recommendations will be incorporated into the government's overall response to the findings of the Murray Financial System Inquiry, which is currently subject to a period of consultation with submissions closing on March 31, 2015.

Regardless of when we learn what recommendations have been accepted, talk of applying America's Chapter 11 reconstruction provisions to Australia's insolvency regime is recurrent and will likely persist as long as flaws in the existing legislation periodically throw up problematic outcomes.

Every shockingly expensive insolvency that seems to provide no return for creditors whilst compensating appointees handsomely provides Chapter 11's proponents with another justification for calls to embrace the American way which, in the end, largely sidelines insolvency practitioners and puts lawyers in the box seat.

In the interests of sustaining debate around significant areas of insolvency reform, SiN presents the following piece by New York-based bankruptcy attorney Daniel A. Lowenthal, reprinted with permission from the October 2014 issue of the Journal of Corporate Renewal, published by the Turnaround Management Association.

Liquidation's outcome 'profoundly disturbing" says On Q Group judge

Matthew Gess
Photo: Worrells 

LIQUIDATORS' remuneration and deeds of company arrangement (DoCAs) are again in the spotlight following the publication of a judgement relating to the failed ASX-listed IT outfit, On Q Group Limited (In Liquidation)(Subject to Deed of Company Arrangement)

The judgement - handed down last Friday by NSW Supreme Court Justice Paul Brereton - ruled on the application of Danny Vrkic, a Wollongong-based insolvency practitioner seeking to terminate the winding up of On Q Group so as to facilitate the effectuation of a DoCA. 

Paul Burness
Photo: Worrells.

But while outlining his reasons for ultimately granting Vrkic's application, the judge expressed multiple reservations about how On Q Group's insolvency has played out.

One concern related to the remuneration of On Q Group's liquidators, Worrells' Matthew Jess and Paul Burness, who were appointed liquidators via a creditors voluntary winding up on December 23, 2008. Justice Brereton questioned the liquidation's purpose.

"Thus the practical effect of the liquidation has been to

recover in excess of $725,000 of assets and transfer it to the liquidators, their agents and advisers, with no benefit at all to those for whose benefit the liquidation is supposed to be conducted. I find this profoundly disturbing," he said.

Prior to the judgement Jess and Burness presented evidence to justify their remuneration, with Jess filing an affidavit on October 1 2014 which laid out the complexities of the liquidation and the work done. The judge however seemed unconvinced.

"But even assuming that every dollar of remuneration can be supported on the basis of time spent at their usual rates, it is difficult to see how it can be justified having regard to considerations of proportionality," he said, referring to his recent decision in the matter of AAA Financial Intelligence Ltd (in liquidation) ACN 093 616 445 (No 2) [2014] NSWSC 1270 (17 September 2014).

In a statement provided to SiN, Worrells shed more light on the background to On Q Group's complicated clean up.

"Prior to us accepting this appointment, we are aware that at least one other major insolvency firm had refused to consent to act due to the significant risk and uncertainty associated with the appointment," the firm said. 

"The Voluntary Administration and subsequent Liquidation of the Company was burdened with a number of complexities, including several separate legal proceedings, and significant costs that we were required to personally fund (at our expense and risk) as there were no recoveries until more than 12 months following our appointment.

"Worrells supports proper scrutiny of liquidators remuneration and we welcome open discussions on insolvency matters."

Justice Brereton's judgement, following hard on the heels of the AAA Financial decision, also drew a quick response from the Australian Restructuring, Insolvency & Turnaround Association (ARITA). 

AFSA and ASIC renew MOU

Veronique Ingram
Photo: AFSA 

AFTER 12 years ASIC and AFSA have renewed their vows, signing a memorandum of understanding (MOU) that replaces a previous arrangement entered into by the regulators of corporate and personal insolvency in April 2002.

The new MOU is designed to facilitate the exchange of information and ensure appropriate referral of relevant matters between the two agencies.

It is also intended to promote cooperation in the areas of compliance, education and enforcement by obliging the regulators to share information when it would make sense to do so and allows for the establishment of  joint task forces when and where appropriate.

In promoting a spirit of cooperation one would’ve thought should have already existed, the MOU requires that ASIC and AFSA liaise in regards to operational and policy matters, liaising being defined for the purposes of the MOU as, among other things, a minimum two meetings a year.

ASIC's John Price
Photo: Flickr

Like a good pre-nup the new MOU’s goals are judiciously curtailed by indistinct and ambivalent legalese, best exemplified by the phrases “best endeavours”, “where appropriate” and “subject to each agency’s obligations at law”.

The new MOU came into effect on September 30, 2014 and is signed by the Inspector General in Bankruptcy Veronique Ingram and ASIC Commissioner John Price. See for yourself: MOU between AFSA and ASIC - September 2014

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Fiorentino to fight on as CALDB declares failings "significant and extensive"

Pino Fiorentino

PINO Fiorentino will seek to overturn a decision by the Companies Auditors and Liquidators Disciplinary Board (CALDB) that has seen him stripped him of his liquidator's registration.

CALDB said in a statment: "The serious and extensive nature of the failings was such as to warrant cancellation of Mr Fiorentino’s registration."

Those "failings" relate to Fiorentino's handling of the affairs of ERB International, to which he was appointed primary liquidator in April, 2008.

According to CALDB the failings "involved a number of different aspects of the liquidation of ERB and involved dishonest use of position, failure to act in good faith in the best interests of ERB and its creditors, lack of competence and failure to comply with statutory provisions." CALDB reached its decision on June 24, 2014, ordering that the deregistration take effect after 14 days.

But Fiorentino told SiN he would ask the Administrative Appeals Tribunal (AAT) to review the evidence used by the Australian Securities and Investments Commission (ASIC) in its application to CALDB.

"This decision by CALDB is totally flawed," he said. "I want the court to make an order that until the review of the evidence by the AAT, it is not right for them to draw conclusions from wrong facts."

Fiorentino also said he's been denied a fair hearing. He said he had paid Tony McGrath of McGrathNicol $30,000 for an expert witness report and had not been given the opportunity to use it at the hearing on February 4, 2014, which took place without him because he refused to participate unrepresented by legal counsel.

Federal Court dismisses Fiorentino's CALDB challenge

Pino Fiorentino

PINO Fiorentino is facing cancellation of his liquidator's ticket after Justice Michael Wigney ruled yesterday that the Sydney-based insolvency practitioner had failed to convince the court he was denied procedural fairness by the Companies Auditors Liquidators Disciplinary Board (CALDB).

Fiorentino applied to the Federal Court on February 5 this year after CALDB had two days earlier refused his application to adjourn a hearing brought on by the Australian Securities and Investments Commission (ASIC).

The corporate regulator wants CALDB to cancel Fiorentino's liquidator's registration over his handling of the insolvency of ERB International. Fiorentino has previously rejected ASIC's allegations. (See: Liquidator denies procuring proxies)

CALDB refused Fiorentino's adjournment application on the grounds that it had already adjourned the matter on several occasions since the first scheduled hearing of ASIC's application on October 21, 2013.

Further, Fiorentino wanted the adjournment so he could sue his professional indemnity insurance provider for refusing to fund the legal expenses associated with defending ASIC's application.

CALDB however was unwilling to accept that such an action would be concluded after six months - as was submitted by Fiorentino - or that further adjournments were justified.

"At the end of the day, the timing of hearings before the Board cannot depend on the vicissitudes of a respondent's private funding arrangements," CALDB said.

Page 13 of the Wigney judgement reveals that CALDB "has not yet made a decision in relation to ASIC's substantive application," the hearing of which concluded on February 6, 2014.

Given CALDB's oft-stated commitment to dealing expeditiously with matters brought before it, a decision may not be long in coming now Justice Wigney has published his reasons.

Fiorentino did not respond when contacted by SiN today so we are unable to report his reaction or whether he is considering other avenues of potential appeal. For detailed background see:

Liquidator denies procuring proxies

Insolvency veteran slapped with suspension

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Liquidator denies procuring proxies

SYDNEY liquidator Pino Fiorentino has strenuously denied allegations he procured invalid employee proxies and voted them in support of a resolution to approve his fees. 

"I never procured anything,” the registered and official liquidator told Sydney Insolvency News (SiN) during a break in a hearing before the Federal Court last week.

“I made a mistake. I didn’t check the proxies. There’s no way I told the director, ‘fill out the proxies and sign them yourself’,” he said.

Fiorentino's comments came as the Federal Court heard his application for a judicial review of a hearing held before the Companies Auditors and Liquidators Disciplinary Board (CALDB) last February.

In late January and early February this year CALDB rejected several applications by Fiorentino for an adjournment of a hearing brought before CALDB by the Australian Securities and Investments Commission (ASIC), which is seeking cancellation of Fiorentino’s liquidator’s registration.

The last adjournment application, made on February 2, proceeded without Fiorentino being present for the bulk of the hearing. Nor was he represented by legal counsel.

CALDB went on to refuse the adjournment application and on February 4 heard the ASIC application. Fiorentino is challenging CALDB’s refusal to grant the adjournment and the subsequent hearing of the ASIC application. At time of writing CALDB had not made its determinations and reasons public.

In an outline of Fiorentino’s Federal Court submissions obtained by SiN, the impact of the proceedings currently  before CALDB is described as “grave” because “ …. the orders sought by ASIC amount to no less than causing the permanent end to the career of the Applicant”. 

The ASIC application was formally brought before CALDB in 2013 following an investigation by the regulator into ERB International, which had owned the Ella Rouge Beauty salon chain.

CALDB slugs Topp with six month suspension

SYDNEY insolvency operator Alan Godfrey Topp has been benched temporarily after failing to lodge hundreds of statutory notices and other documents with the corporate regulator.

Following an application from the Australian Securities and Investments Commission (ASIC), the Companies Auditors and Liquidators Disciplinary Board (CALDB) said it had ordered Topp's liquidator's registration be suspended for six months. According to the ASIC website, his status as an official liquidator is unaffected by the CALDB order.

In its November 2013 application, ASIC alleged that over a period of almost four years beginning in May 2009, Topp failed to lodge 321 documents, including 209 presentation of six monthly accounts, otherwise known as 524 forms. Of these 309 related to liquidations; the remaining 12 to administrations. 48 EX01 forms were also overdue along with 37 5011 or 1500 forms. The lodging lapses involved 61 companies.

ASIC notified Topp on April 4, 2013 that it had identified the compliance failures so it took just over 12 months for the process to reach the point where CALDB ordered the suspension.

CALDB, which heard the matter on April 7 this year, said Topp did not dispute the allegations, which were the subject of agreed consent orders between the parties. The panel also acknowledged that no dishonesty was involved and that Topp's plight had been exacerbated by insufficient resources and unspecified "personal issues".

Once his six month suspension is complete Topp will be restricted for a further six months to accepting appointments only as a joint liquidator.

As part of the agreed consent orders he is also required to pay ASIC's $2000 cost of the application as well as what promises to be hefty late lodgement penalty. Topp did not respond to a request for comment.

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See also: Insolvency veteran slapped with suspension