Liquidator required to resign and remuneration limited due to conflict issues
ARITA has completed an investigation into a member who took an appointment over a company providing computer maintenance services where his firm had a business relationship.
Although the member had considered conflict issues prior to their appointment, and considered that the appointment was not prohibited under ARITA's Code of Professional Practice ("the Code"), ARITA's Professional Conduct Committee determined that it was not appropriate for the member to accept the appointment.
The member was given the option of convening a creditors meeting to facilitate their replacement or making an application to the court to have the appointment ratified or a replacement appointed. The remuneration to be drawn by the member in respect of the appointment was capped to ensure that he did not benefit or profit from his behaviour and no costs associated with ARITA's investigation or the replacement of the appointee were recoverable.
A meeting of creditors was convened and replacement liquidators were appointed by the creditors. The member also advised creditors of the cap on his the remuneration.
The 3rd Edition of the Code which came into effect on 1 January 2014 provides further guidance to practitioners regarding conflicts of interest arising from business dealings. Members are reminded that they should be guided, not merely by the specific terms, but by the spirit of the Code.