Media release: Clive Palmer moves to junk mail
The professional body for insolvency practitioners, ARITA – the Australian Restructuring Insolvency & Turnaround Association – has responded to Clive Palmer’s attack on liquidators, which it regards as a cynical exercise in deflection.
'I think most Australians will see Palmer’s campaign for what it is - junk mail,' said ARITA Chief Executive Officer, John Winter.
In a flyer being letterboxed to homes across the country, Mr Palmer calls for the Financial Services Royal Commission to be extended into liquidators and administrators on a claim that they 'have been acting unjustly for years, it's time that Australians were defended against this industry. These people need to bear the consequences of their heartless activities.'
'It’s not hard to guess the motives behind this. Mr Palmer’s actions as a director of the collapsed Queensland Nickel (QNI) are currently being investigated as part of two major inquiries by liquidators. One of those liquidators has been appointed and is being funded by the Federal Government. Such actions by these liquidators are clearly necessary and appropriate. Indeed, if you speak to many of the former workers of QNI they will speak very highly of the work performed by the liquidators,' said Mr Winter.
'Two of the key roles that liquidators play in an insolvency are to investigate the actions of directors of failed businesses on behalf of ASIC and to identify actions which might be taken against directors to return money to creditors. It’s not unusual for directors of failed businesses to actively work against liquidators in these investigations,' explained Winter.
The collapse of QNI led to some 800 people losing their jobs due to the failure of that business. It also led to the largest ever claim against the Federal Government’s Fair Entitlements Guarantee – a taxpayer funded scheme enabling employees to be paid their entitlements when directors have failed in their obligations to them.
'Quite aside from the obvious self-interest, Mr Palmer’s campaign is ill-founded. The public can be assured that liquidators are heavily regulated, and their actions and powers have been more than thoroughly reviewed, including by a 2010 Senate Inquiry into the regulation, registration and remuneration of insolvency practitioners in Australia which was the genesis of recent law reform. There have been numerous reviews since, including the 2012 Senate Standing Committee on Economics Inquiry into the post-GFC banking sector and its 2015 Inquiry into insolvency in the Australian construction industry. There was also the 2015 Parliamentary Joint Committee on Corporations and Financial Services Inquiry into the Impairment of Customer Loans and the similarly referenced 2017 Senate Select Committee Lending to Primary Production Customers.'
'These subsequent inquiries uncovered little in the way of endemic or systemic issues.'
'Arising from the 2010 inquiry, successive governments grappled with the Insolvency Law Reform Act which was finally pushed through in 2016. That Act – which was an extraordinary 10% of all legislation passed in 2016, being some 800 pages long including associated documents – came into force less than a year ago. It brought in significant changes, including much greater power for creditors and to regulators.'
'In addition, liquidators and bankruptcy trustees have two regulators, ASIC and the Australian Financial Security Authority (AFSA). ASIC spends $10.5 million a year in reviewing liquidators with around 15 staff dedicated to just this task for only 680 liquidators. Liquidators are now required to pay for this oversight to the tune of around $15,000 per year each.'
'There’s no doubt the public can have confidence in the work of insolvency practitioners. But it’s also true that they have a tough and thankless task. But let’s be clear that the tough work they do is heavily prescribed by the law. If politicians have a negative view of the work that liquidators have to do, then they should look to change the law. Indeed, ARITA has already announced that it will be launching a Financial Recovery Law Reform Commission with a key task to include a major simplification of the law and a greater focus on being able to turnaround distressed businesses.'