ASIC admits digital triage of liquidator reports

The Australian Securities and Investments Commission (ASIC) has revealed that the liquidator reports it receives are first handled by digital tools to determine whether they go forward.

Answering questions on notice from NSW Liberal Senator, Andrew Bragg, said it received up to 8,000 initial statutory reports from liquidators in a typical year and that these reports are generally high-level, highlighting suspected misconduct, the extent of deficiency of funds available to creditors and the number of creditors affected.

“In about 15% of cases a supplementary report is sought from the liquidator,” it said.

“ASIC uses digital tools to assess initial statutory reports, using a conditional logic framework that takes into account a range of different risk-based factors depending on the conduct being reported by the liquidator.”

“Such factors include whether or not sufficient books and evidence exist, whether there is a breach of relevant provisions, whether the liquidator recommends further action and whether there was previous conduct.

“We use the responses to automated questions to determine whether to request a supplementary report.”

ASIC said that in this case of the Estrategy Group which was the subject to Senator Bragg’s question, “given a range of factors, including that the information available to assess misconduct was limited and there was no evidence of previous misconduct, ASIC determined to not request a supplementary report”.

Elsewhere in its answers to Senator Bragg, ASIC said it had not received any reports of misconduct in relation to “friendly liquidators” in connection with Plutus Payroll matter

ASIC was unaware of any allegations of off-the-book cash payments being given to liquidators in connection with Plutus Payroll until 7 June 2023 when ASIC received for the first time, from the ABC Four Corners program, four transcripts of telephone intercepts conducted by AFP in 2016 and 2017.

“ASIC is considering this material and whether further investigation is warranted. 2017 Government proposals for law reform to combat illegal phoenix activity included the suggestion of a ‘cab rank rule’ which would remove the ability of companies to appoint their own liquidators. ASIC supported a restricted ‘cab rank’ and ARITA did not. The proposed reform was not progressed,” ASIC’s answer said.