The Australian Securities and Investments Commission (ASIC) today published an ASIC guide for registered liquidators who are appointed under Part 5.3A of the Corporations Act 2001 (the Act) as administrator of a company, or of a deed of company arrangement (DCA).
The guide explains ASIC’s interpretation of certain obligations of administrators where a DCA proposal involves a creditors’ trust. In particular, it explains the information that ASIC thinks is material and should be disclosed to creditors in this situation.
Creditors’ trusts are explained in paragraphs 1.1-1.6 of the guide.
ASIC is concerned that administrators appear not to be aware of, or are not properly considering, all the issues raised by the use of a creditors’ trust, and therefore, are not acting in ways which adequately protect the interests of creditors, given the special risks that creditors’ trusts pose for creditors. One of the key obligations of administrators is to give creditors sufficient material information to enable the creditors to make an informed decision about the future of the company.
‘Our experience indicates that generally, administrators are not giving creditors all the information we believe is material before they vote on a DCA proposal that involves a creditors’ trust. By clarifying the information that we think is material in these cases, we aim to assist administrators to better perform their duties and functions’, ASIC Commissioner, Ms Berna Collier said.
‘Any specific issues that may arise from our guidance will be discussed in our regular liaison forums with the insolvency profession,’ Ms Collier said.
Copies of the ASIC guide are available from the Insolvency page of the ASIC website at www.asic.gov.au, by emailing ASIC’s Infoline on infoline@asic.gov.au or by calling 1300 300 630.
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