ASIC has assisted employees gain access to the Government’s ‘Fair Entitlements Guarantee scheme (Entitlements Scheme) by exercising its wind-up powers and appointing liquidators to 17 abandoned companies in the 12 months to 30 September 2018.
Because ASIC appointed the liquidators, employees of these 17 companies can now apply to recover owed unpaid employee entitlements. The 17 abandoned companies owe at least 32 employees more than $570,000 in employee entitlements.
The appointment of liquidators also facilitates a full and proper investigation into the reasons why the companies failed and allows recovery of any voidable or unreasonable director-related transactions that can potentially be returned to creditors.
ASIC made the following nine appointments from a new panel of liquidators who can be appointed to abandoned companies.
A related development is that the Government introduced the Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018, on 20 September 2018 (which has now passed the Lower House). It proposes to amend the Corporations Act 2001 to strengthen enforcement and recovery options to deter and penalise company directors and other persons who engage in, or facilitate, transactions that are aimed at preventing, avoiding or significantly reducing employer liability for employee entitlements in insolvency; enable the recovery of unpaid employee entitlements of an insolvent company from certain entities in limited circumstances; and enable the Australian Securities and Investments Commission to disqualify company directors and other officers (either directly or on application to the Court) ,where they have a track record of corporate contraventions and inappropriately using the Fair Entitlements Guarantee scheme to pay outstanding employee entitlements. DATE OF EFFECT: The day after Royal Assent.
[ASIC website: Media Release; APH website: Bill Tracker – Strengthening Protections; LTN 201, 18/10/18; Tax Month – October 2018]
CPD questions (answers available)
- Is the Fair Entitlements Guarantee Scheme, a Government scheme?
- Does a company that can’t pay its employees entitlements, need to have a liquidator appointed to allow employees to access these Guarantee Scheme funds?
- To how many companies did ASIC appoint liquidators?
- How many employees did this assist?
- How much in unpaid benefits was involved?
- Might the liquidators recover any funds from directors of the abandoned companies?
