Sydney Liquidator's registration suspended

Wednesday 2 December 2009

Taken from the ASIC website
The Administrative Appeals Tribunal (AAT) has suspended Mr Geoffrey McDonald’s registration as a liquidator for two years after finding he failed to carry out or perform adequately and properly his duties as a liquidator under section 1292 of the Corporations Act (the Act).

The suspension follows Mr McDonald’s application in September 2008 to the AAT for a review of the Companies Auditors and Liquidators Disciplinary Board’s (CALDB) decision to exercise its powers under section 1292 of the Act. The CALDB has the power to cancel or suspend a person’s registration as a liquidator or an auditor. By consent between the parties, the AAT set aside the CALDB’s decision and suspended the registration.

The AAT decision highlights the need for liquidators to ensure they comply with their duties and obligations under the Act. The Act now requires voluntary administrators to send to creditors with the notice of the first meeting, a declaration concerning any ‘relevant relationships’ and indemnities.

The Australian Securities and Investments Commission (ASIC) originally made an application to the CALDB following an investigation into Mr McDonald’s conduct while Formula Engineering Pty Ltd (Formula) was in external administration between April 2000 and January 2003.

The investigation found Mr McDonald participated in separate arrangements with the appointed external administrator of Formula when the company was in external administration. During this period, Mr McDonald was a partner at Hall Chadwick and continued to be a partner until he left the firm in August 2008.

Registered liquidators from Hall Chadwick were prohibited by professional standards from accepting an appointment as the external administrator of Formula because of a prior professional relationship.

ASIC’s application to the CALDB and the AAT's decision are only now being made public as the AAT in September 2008 made orders regarding non-publication of the CALDB’s decision and the confidentiality of Mr McDonald’s identity. In all subsequent proceedings, Mr McDonald was known as VQNB.

Background
The CALDB is an independent statutory body given functions and powers under the Act. The CALDB’s disciplinary responsibilities under the Act are intended to provide an incentive to registered auditors and liquidators to maintain high professional standards. The CALDB also has a public protective and educative role by virtue of its jurisdiction to cancel or suspend the registration of an auditor or of a liquidator.

ASIC conducts regular compliance programs to ensure that auditors and liquidators comply with their duties and obligations under the Act.