ASIC has recently announced that it has used its powers to appoint liquidators to ten abandoned companies. ASIC did this to assist employees of those companies to gain access to the Fair Entitlements Guarantee (FEG). Employees usually are unaware that they can obtain ASIC’s help in this regard so let me explain the process.
FEG replaced the better known General Employee Entitlements Redundancy Scheme (GEERS) in December 2012. FEG is the legislative safety net scheme for employees funded by the Australian Government. It is designed to assist employees owed unpaid entitlements because of their employer company’s liquidation or the company directors’ bankruptcy. But, some employees owed entitlements are unable to access FEG because the companies’ directors have abandoned their companies without putting them into liquidation. So the appointment of liquidators by ASIC facilitates access to FEG.
ASIC’s recent batch of ten abandoned companies assisted 26 employees owed over $350,000 in employee entitlements. Since 2012, ASIC has used its wind up powers to appoint liquidators to 29 companies assisting 127 employees owed around $1.8 million in employee entitlements. ASIC had previously appointed 34 registered liquidators to its internal liquidator panel.
Any employees interested in the process can have a look at Regulatory Guide 242 ASIC’s power to wind up abandoned companies which explains how ASIC will prioritise companies for winding up and outlines the factors it considers in exercising the discretionary power, including:
- the amount of outstanding employee entitlements claimed;
- whether there is another creditor capable of winding up the company;
- the amount of money available in the Assetless Administration Fund and how ASIC might best use this money; and
- whether the directors have abandoned the company.
RG 242 also explains how to make a request to ASIC to wind up an abandoned company, how ASIC will assess a request and what happens if ASIC does decide to wind up a company. It also discusses what other options employees can pursue if ASIC decides not to wind up a company. ASIC pays the registered liquidator from its Assetless Administration Fund.
Scuttlebutt from calls we receive suggest that the process can be somewhat clunky and slow. But it seems to be working!