WHILE it's good news that the Department of Employment will fund liquidators' recovery actions against directors and companies where an insolvency has left employee entitlements unpaid, more interesting still is the revelation that banks and receivers are also to be the subject of a renewed focus.
On July 1 the Federal Department of Employment, which administers FEG, or the Fair Entitlements Guarantee Scheme, resurrected the Active Creditor Pilot (ACP) program, phoenix like, after it was shut down without explanation in 2009. The new bird is called the Fair Entitlements Guarantee Recovery Program.
It's architect, Henry Carr is eager to again put money into the pockets of liquidators with strong cases for recovering FEG funds from directors who left companies with unpaid employee obligations. But he's not stopping there.
"One of the issues that is within the scope of the FEG Recovery programme is ensuring that receivers and controllers have fulfilled their statutory duty to pay employee entitlements out of floating charge assets, before paying proceeds of the secured property to their appointer," Carr told SiN.
"In circumstances of a breach of their statutory duties, the receiver/controller may be personally liable to pay damages; or the bank that had knowledge that certain preferential creditors remained unpaid, may be found to hold the proceeds of the charged assets on constructive trust for the Commonwealth," he said.
"Obviously a lot of the insolvency profession look the other way when I bring up this topic but I'm very interested in looking at whether all of the banks have lived up to their obligations in respect of their floating charge assets."
At its core, Carr said the issue is whether a bank can have a fixed charge over highly liquid assets like debtors and cash at bank.
On July 1 the Federal Department of Employment, which administers FEG, or the Fair Entitlements Guarantee Scheme, resurrected the Active Creditor Pilot (ACP) program, phoenix like, after it was shut down without explanation in 2009. The new bird is called the Fair Entitlements Guarantee Recovery Program.
It's architect, Henry Carr is eager to again put money into the pockets of liquidators with strong cases for recovering FEG funds from directors who left companies with unpaid employee obligations. But he's not stopping there.
"One of the issues that is within the scope of the FEG Recovery programme is ensuring that receivers and controllers have fulfilled their statutory duty to pay employee entitlements out of floating charge assets, before paying proceeds of the secured property to their appointer," Carr told SiN.
"In circumstances of a breach of their statutory duties, the receiver/controller may be personally liable to pay damages; or the bank that had knowledge that certain preferential creditors remained unpaid, may be found to hold the proceeds of the charged assets on constructive trust for the Commonwealth," he said.
"Obviously a lot of the insolvency profession look the other way when I bring up this topic but I'm very interested in looking at whether all of the banks have lived up to their obligations in respect of their floating charge assets."
At its core, Carr said the issue is whether a bank can have a fixed charge over highly liquid assets like debtors and cash at bank.