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ASIC bans two directors for failed companies, neglect of duties
27 October 2022
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10 minute read
ASIC has disqualified two directors for their involvement in a total of five failed companies and neglect of their obligations.
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Adam Craig Baker of Port Macquarie, NSW, has been banned from managing corporations for the maximum period of five years for three failed companies. ASIC said he showed “a serious disregard for the law in the way he directed and managed” the three companies, which ended up with debts of almost $10 million.
Between January 2009 and June 2020 Mr Baker was the director of three companies which entered liquidation: Modulate Engineering Pty Ltd, Port Container Services Pty Ltd, and Port Containers Pty Ltd. All were involved in the production, sale and logistics of shipping containers.
ASIC said Mr Baker:
- Failed to maintain adequate company records and ensure that Modulate Engineering and Port Containers complied with their statutory lodgement obligations.
- Failed to ensure that the companies paid tax, workers compensation and superannuation
- Allowed the companies to trade while insolvent
- Allowed Port Containers and Port Container Services to loan funds to related parties with no benefit to these companies
- Was an officer of Modulate Engineering despite being disqualified from managing companies due to his bankruptcy
- Abused the corporate form when he transferred the business, but not the debts, of the existing companies to new entities causing detriment of creditors
At the time of ASIC’s decision, the three companies owed a combined total of $9,966,877 to unsecured creditors, including $2,782,083 owing to the ATO.
In disqualifying Mr Baker, ASIC relied on supplementary reports lodged by Timothy Heesh and Amanda Lott of TPH Advisory, liquidators of Modulate Engineering, Stephen Hathway of Helm Advisory, liquidator of Port Containers and Daniel Quinn of SV Partners, liquidator of Port Container Services.
ASIC has also disqualified Michael Higgs of the Sunshine Coast, Queensland, from managing corporations for two years due to his involvement in the failure of two companies.
From July 2015 Mr Higgs was the director of two companies which entered liquidation, Tropic Landscapes Pty Ltd and Tropic Developments Pty Ltd, both of which were involved in providing structural landscaping services and finished with combined debts of more than $500,000.
ASIC found that Mr Higgs:
- Failed to ensure that Tropic Landscapes and Tropic Developments lodged tax documents with the ATO
- Allowed Tropic Developments to provide loans without ensuring the company was left with funds to pay its taxes
- Failed to ensure Tropic Landscapes maintained adequate books and records
At the time of ASIC’s decision, the two companies owed a combined total of $503,110 to unsecured creditors, including $366,791 to the ATO.
In disqualifying Mr Higgs, ASIC relied on supplementary reports lodged by the liquidator of Tropic Landscapes, Glenn Michael Shannon of Hall Chadwick, and of Tropic Developments, Darryl Edward Kirk of Cor Cordis.
Mr Higgs is disqualified from managing corporations until 10 October 2024 while Mr Baker is disqualified from managing corporations until 12 September 2027. Both have the right to seek reviews of ASIC’s decision by the AAT.
Section 206F of the Corporations Act allows ASIC to disqualify a person from managing corporations for a maximum period of five years if, within a seven-year period, the person was an officer of two or more companies and those companies were wound up and a liquidator provides a report to ASIC about each of the company’s inability to pay its debts. ASIC maintains a register of banned and disqualified persons.
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