Do you still have that asset? (Buying property owned by a deregistered company)

Recently I had an enquiry regarding a company from which I had retired as liquidator. The liquidation was long since finished and the company had been deregistered.

The enquirer had acquired the company’s former business name and wanted to know if I had any leftover marketing material (or anything else) bearing the business name that they could perhaps use.

Someone’s cute idea, I thought, and although we didn’t get to the stage of talking price, I suspect that they would have wanted any material or asset for free to “take it off my hands”.

The answer is: Yes, possibly, but there will be quite a process to go through first. So you would only really consider embarking on the process if the relevant asset or property is sufficiently worthwhile or valuable.

Upon deregistration of a company any remaining property of the company vests in ASIC (Section 601AD(2) of the Corporations Act 2001). “Property” includes land and all other assets previously vested in the company or the liquidator, tangible or otherwise, including contingent assets.

Once deregistered, the company cannot deal with the property, and neither can anyone else, including the former liquidator. Any attempted disposal or transfer by anyone else except ASIC will be invalid.

So once the company has been deregistered, the former liquidator cannot help.

The enquirer had two possible options:

1. Reinstatement of the company (see your friendly lawyer).

Reinstatement returns the company to registered status as if it had never been deregistered. All the previous company officers are restored to their roles from the date the company was deregistered. Any assets vested in ASIC pursuant to Section 601AD(2) re-vest in the company. Assets can then be acquired from the company or liquidator.

2. Make an application to purchase the vested property from ASIC.

ASIC may, upon application, sell property of a deregistered company. ASIC’s power to sell property is discretionary and not mandatory, and ASIC generally exercises its powers to deal with vested property as a last resort.

Applications are considered by ASIC on a case-by-case basis and there is no guarantee that an application will be successful. Further, ASIC is not usually in possession of property that has vested in it.

There are certain assets regarding which, and certain conditions under which, ASIC generally will not approve applications to sell property. And with all applications to ASIC, there are conditions of sale of property (See ASIC checklist – Purchase Vested Property).

For the enquiry I had recently, the potential assets of interest did not warrant considering the above two options for more than a fleeting moment. But some potential assets and proposed actions, including legal actions, do.

In February of this year a deregistered company was reinstated and I was appointed liquidator so that a party could instigate legal proceedings against the reinstated company. And ASIC has made the generalised statement that it “receives many satisfactory applications” for the purchase of vested property.

So deregistration isn’t always the end of the story.

 

July 2019