One of the “misuses” in FEG’s discussion paper: Addressing corporate misuse of FEG is the “sharp” use of corporate structures to separate a business’ assets from its employee entitlement liabilities.
Almost invariably in antecedent transaction recoveries, to found a claim, a company has to enter into an action or transaction at a time that the company is, is presumed to be or is about to become insolvent. Companies that are solvent are free to structure their affairs any way they like and protect their assets accordingly. This is far from sharp corporate practise and efforts to control it should be resisted to avoid unintended consequences.
Nevertheless, the Corporations Act already contains a power for FEG to seek a contribution order from a contribution order group. FEG recognises that this power has never been exercised by FEG or any other eligible applicant.
To value such a claim, the applicant must establish the difference between the direct or indirect benefit from the work done by the employees from the benefit that would be reasonable in the circumstances if the company was not related. That calculation would take some creative accounting beyond the skills of this humble liquidator.
The Act should calculate claims as the true cost (including all oncosts) of the employees, compared to the amount paid, rather than the benefits received. Better yet, scrap these unused provisions altogether.
Kommentare