Abandoned companies to be put into liquidation
COMPANIES abandoned by directors will automatically be placed into liquidation by the corporate watchdog when a new panel of liquidators is assembled early next year.
Liquidating abandoned companies will make it harder for directors to restart the same company, but without debts - known as phoenixing - and give employees access to a government-funded scheme for unpaid entitlements such as leave and redundancy.
The Australian Securities and Investments Commission is putting together a panel of liquidators willing to take on jobs for $8800, plus GST.
This could increase the amount of money paid out by the General Employee Entitlements and Redundancy Scheme.
Employees cannot access GEERS unless directors liquidate the company. Under the new scheme, employees who feel they are entitled to GEERS money can ask ASIC to wind up an abandoned company.
Liquidator Glenn Franklin, from Lawler Draper Dillon in Melbourne, said this would be enough to do a basic assessment of an abandoned company.
The work will be funded by the Assetless Administration Fund and the size of the panel will depend on how many liquidators applied to an open tender, which closed this week.
GEERS will generally pay the cost to process any outstanding claims by employees. It is also more money than liquidators often get when they are appointed by a court.
This work was often done without being paid, Mr Franklin said. Some employees of abandoned companies had used their own money to pay for liquidation so they could access GEERS payments, he said.
ASIC might appoint a liquidator if the company did not responded to any queries, did not lodge financial records for 18 months, or if its review fee was more than a year overdue, or if ASIC believed a director had abandoned the company or if it believed the company was not carrying on a business.
The government has paid out more than $1 billion through GEERS since it started in 2001, but has only recovered $150 million.
An extra 50 to 100 failed companies were expected to be wound up every year under the scheme, ASIC commissioner John Price told BusinessDay earlier this year.