Upon a review of preliminary investigations into the company’s affairs, the Liquidator will try to obtain as much information as they can from interviews with the company’s officers. However, the directors may be evasive, vague and unhelpful in providing information to the Liquidator as requested.
Public examinations can be extremely useful tools to fill in the missing pieces of the liquidation jigsaw puzzle, especially in circumstances where there are a web of complex transactions involving the company and its assets.
- Section 596A of the Corporations Act 2001 (Cth) (the Act) – the mandatory power which means the Court has no discretion – it must issue a Summons if the applicant satisfies the relevant requirements.
- Section 596B of the Act – the discretionary power which is directed to a person other than an examinable officer which encompasses a wider class of potential examinees than section 596A of the Act but the Court still retains the discretion not to grant the examination summons. The Court will generally only grant a section 596B summons if it is satisfied that the examinee is able to give the information which is sought.
- Section 597A of the Act contains an alternative procedure where a Liquidator (or another eligible applicant) can obtain information by way of Affidavit from an “examinable officer” of the company about its “examinable affairs”.
The examination summons may require the examinee to produce documents before being examined.
Prior to the examination being conducted, it is imperative that the Liquidator and lawyers are clear as to what is the subject matter of the examination – what is your purpose for conducting the examination and what information do you want to ascertain from the examinees? A Court Book of relevant documents will be compiled.
Examinations can be used in cases where:
- The Liquidator is determining whether to take action against certain people for breaches of the legislation, for example, insolvent trading or breaches of director’s duties; or
- Proceedings are already on foot and a reasonable approach can be take to negotiations with a defendant as a result of the material obtained during an examination.