Professional Conduct Committee determination
Following receipt of a complaint, ARITA investigated concerns raised regarding the level of the pre-appointment engagement that an ARITA member had with debtor companies, their advisors, director and/or a new investor prior to accepting appointments as voluntary administrator and whether it constituted a precluded relationship which would have prohibited the member’s acceptance of the appointment. Concerns were also raised regarding the member’s assessment of a pre-appointment sale of businesses run by the debtor companies.
In accordance with the powers delegated to it by the ARITA Board, ARITA’s Professional Conduct Committee determined that:
- the extent of the pre-appointment engagement did not constitute a precluded relationship which would have prohibited the member’s acceptance of the appointment.
- the Declarations of Independence, Relevant Relationships and Indemnities (DIRRIs) issued by the member were deficient and failed to comply with the requirements of section 4.2 of the ARITA Code of Professional Practice: Insolvency Services (Code) as they:
- failed to make complete and clear disclosure of the circumstances of appointment as required by section 4.2(e), and
- omitted mandatory information about the indemnities received by the member as required by section 4.2(k).
In accordance with section 4.4 of the Code, the DIRRIs are to be updated and provided to creditors with the next communication and tabled at the next meeting of creditors (if there are any).
- the member failed to comply with section 6.12 of the Code by not preparing working papers that appropriately document the member’s assessment of the sale of businesses which provide a sufficient and appropriate record of the investigations undertaken.
The PCC determined that the following penalties be imposed pursuant clause 6.3 of the ARITA Regulations:
- a reprimand be recorded on the member’s disciplinary records retained by ARITA;.
- a direction that the member attend ARITA’s Essential Skills – Insolvency: Independence course at the next available opportunity;
- a requirement that the member prepare a paper addressing the issues raised through the conduct process which may be used by ARITA, on an anonymised basis, for education and professional development purposes, including in public forums.