11 December 2008

The Corporations and Markets Advisory Committee (CAMAC) has released a report on Issues in external administration.

The report responds to a request from the former Government to advise on various proposals that were raised during public consultation on amendments to the insolvency provisions of the Corporations Act. It contains recommendations to improve the efficiency of the external administration process.

The Convenor of the CAMAC, Richard St John, said the Committee has made recommendations to assist the efficient and expeditious conduct of external administrations of distressed companies, including by enhancing the flow of information to creditors and others.

In the Committee’s view, greater use of the Internet for conveying information to creditors as well as to the general public would enhance the efficiency, and reduce the cost, of external administrations. Creditors in particular will be empowered by ready access to information about the identity of fellow creditors and the progress of an administration. This can be achieved by:

• requiring administrators to publish the name and contact details of each creditor on a designated website and to publish the estimated amount due to each creditor, other than in relation to any creditor who requests that the amount not be made public
• giving an external administrator the right to inform creditors in the initial notice to them that all subsequent information will be made available on a designated website, with creditors having the right to request printed copies of that information
• implementing a staged move of mandatory public notices relating to external administrations from the print media to an ASIC website.

The report also recommends measures to enhance procedural efficiency, including:

• enabling an administrator who for good reason cannot chair the major meeting of creditors in a voluntary administration to appoint a suitably qualified nominee subject to creditor approval
• giving creditors the power to determine the remuneration of a provisional liquidator
• allowing a liquidator to conduct a postal vote of creditors on certain administrative matters.

The report also recognises the importance of ensuring continuity where the office of an external administrator becomes vacant. For this purpose:

• ASIC should be able to replace a liquidator if there is a vacancy in that office
• ASIC should be able to take possession of and transfer the books of a company if there is a vacancy in the office of external administrator.

The report covers a number of other proposals where the Committee was not persuaded of the need for change.

Copies of the Report

Click here to view or download the Report (PDF file, 903 KB)

To receive a bound copy, please send your postal details to: mailto:camac@camac.gov.au

Further information

For any further information, please contact John Kluver, Executive Director on (02) 9911 2950 or by email: mailto:john.kluver@camac.gov.au
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