Worrell, in the matter of regulation 5.6.06 of the Corporations Regulations 2001

The applicants are a group of insolvency practitioners who operate under the name “Worrells Solvency & Forensic Accountants” from offices in Brisbane, the Sunshine Coast, the Gold Coast, Sydney and Melbourne. They sought a declaration that they are not required to open a separate bank account for each company to which they are, have been or will be appointed as liquidators, administrators or receivers. The applicants sought orders pursuant to Regulation 5.6.06(1) of the Corporations Regulations 2001 (Cth) that they be authorised to conduct a special bank account with the National Australia Bank for each company to which they are, have been, or will be appointed as liquidators, administrators or receivers with such accounts being established in Brisbane, Sydney, Melbourne, the Gold Coast and the Sunshine Coast. The applicants also sought an order pursuant to Regulation 5.6.09(2) of the Regulations that they be authorised to deposit and pay out all monies in respect of each such company into the proposed special bank account to be established in each place of operation of each practice. In the alternative, the applicants sought a declaration that their conduct, for and in respect of the matters to which the regulation applies, is not invalid by reason of any contravention of Regulation 5.6.06. The Australian Securities and Investments Commission intervened in the proceedings. The Court held that Regulation 5.6.06(1) of the Regulations requires a liquidator to open a separate bank account in respect of each liquidation. It is not an exception to that obligation. It does not permit the use of a compound account. The Court found that the applicants have not had proper regard to legal advice in establishing the scope and operation of the regulatory arrangements concerning the compound account. The Court considered the exercise of its discretion under Regulation 5.6.06(1) and Regulation 5.6.09 of the Regulations and the power conferred by s 1322(4)(c) of the Corporations Act 2001 (Cth). The Court held that an order ought to be made authorising each of the applicants in their capacity as liquidators of a schedule of identified companies to make payments into and out of a special bank account established for the purpose of completing the winding-up of each entity presently under insolvent administration by any one of the applicants as liquidators. The Court also made an order relieving the applicants from any liability to date, under the Act, in respect of a failure to comply with Regulation 5.6.06(1). The form of the orders is to be the subject of further submissions. The costs will be reserved for later determination.