ASIC has assisted employees gain access to the Fair Entitlements Guarantee scheme (FEG) by exercising its wind-up powers and appointing liquidators to 19 abandoned companies.
From 1 July 2020 to 30 June 2021, ASIC appointed liquidators to 19 abandoned companies owing at least 29 employees $448,370 in employee entitlements.
By comparison, from 1 July 2019 to 30 June 2020, ASIC appointed liquidators to eight abandoned companies owing at least 20 employees more than $294,000 in employee entitlements.
Generally, the companies have been abandoned for more than six months before ASIC makes the appointment.
Abandoned companies are those where directors are unable to discharge their duties or have abandoned their insolvent companies without first putting them into liquidation.
ASIC’s appointment of liquidators facilitates access to FEG for employees who would otherwise be ineligible to apply for assistance. The appointment of liquidators also allows a full and proper investigation into the reasons why the companies failed and may assist the recovery of any voidable or unreasonable director-related transactions. In addition, abandoned companies may be an indicator that the director has engaged in illegal phoenix activity.
Employees of abandoned companies who are owed employee entitlements can apply to ASIC to wind up the company by lodging a report of misconduct.
More information about the process is available in Regulatory Guide 242 ASIC’s power to wind up abandoned companies (RG 242).
