Women in insolvency and the path to becoming a Liquidator

Career insights relevant to all budding insolvency specialists.

Insolvency has a reputation as a traditionally male dominated industry. With statistics such as 10% of registered liquidators¹ and 13% of bankruptcy trustees being female², that reputation certainly rings true.

There are a number of reasons for the large imbalance of female representation in insolvency.

• Perception – the initial (and misconceived) views by those outside of the industry that an insolvency practitioner must be aggressive and cutthroat. This tends to put off female graduates from entering the industry.

• History – Women in insolvency had a late start. The first Australian insolvency laws began in the mid-1800s, and the Commonwealth bankruptcy laws were passed in 1924. It wasn’t until 1971 when the first female trustee, Diana Newman, was registered. She also later became the first female liquidator registered in 1980.

• Registration requirements – requirements of both liquidators and trustees require registrants to have worked at least 4,000 hours of relevant employment at a senior level in the five years preceding the application. This is a particularly difficult metric to meet if any significant amount of time off has been taken for parental leave, or if not working full time.

However, ASIC (Australian Securities and Investments Commission), AFSA (Australian Financial Security Authority) and ARITA (Australian Restructuring Insolvency & Turnaround Association), the main industry bodies, have all set their own targets designed to address the gender imbalance within the profession. There are also a number of women’s insolvency organisations whose purpose is to promote the advancement and representation of women in the industry. Worrells as an employer is also supportive of its female staff at all stages of their careers. This includes providing career development plans, flexible working conditions and the option to work part time, allowing mums to also pursue their parenting goals. In the last financial year, Worrells nationally promoted 9 new principals, with 4 of those being female.

How to become a liquidator

Whatever the gender, for any budding young insolvency accountant with dreams of becoming a registered liquidator and/or trustee, there is no doubt that you will be required to put in the hard work, study hard and get the requisite experience and knowledge on the job.

Earlier this year, I went through the arduous process of applying for my liquidator’s licence. Having been through the process, I can confirm that it is every bit an involved process, requiring many days of diligently compiling the required information to form an application (mine totalled nearly 60 pages of content), followed by a nerve racking interview. 

ASIC Regulatory Guide 258 prescribes the registration requirements for liquidators (RG 258). The following is a summary of the application process:

Education

 You must have completed:

• A tertiary qualification that includes subjects dealing with accounting and commercial law

• 2 course units accredited under the Australian Qualifications Framework Level 8 in the practice of external administrations (for example the ARITA advanced certification course)

Experience

Before considering making an application, you will realistically have around 10 to 15 years of experience in insolvency, with varied experiences in all forms of administrations, including large and complex administrations. You will be required to provide:

• A summary of your employment history for the last 5 years, with full details demonstrating that you have engaged in 4,000 hours of relevant insolvency experience at a senior level.

  • With a breakdown by hours of the time spent on each job totalling the 4,000 hours.

  • Details of the complex jobs you have been involved in and demonstrate that you had formed opinions and recommendations for the appointee, and made planning, strategic and tactical decisions

• A reference from your employer relating to your resourcing, capacity and independence to perform your role as a liquidator.

• 2 referee reports corroborating your experience during the previous five years

• Letters of good standing from your relevant professional / industry bodies (CPA, CAANZ, IPA, ARITA)

Ineligibility

You will not be eligible to be registered as a liquidator if, in the past 10 years, you:

• Have been convicted of an offence involving fraud or dishonesty

• Have been an insolvent under administration

• Were disqualified from managing corporations under Pt 2.6D of the Corporations Act 2001.

• Had your registration as a liquidator or trustee cancelled

• Are not a fit and proper person.

Interview

Provided it includes all the information, statements, explanations and other required matters, your application will be referred to a committee for consideration. The committee will then interview you and you will need to demonstrate through your answers that you meet the eligibility requirements to be registered as a liquidator. The types of questions are generally aimed at testing your technical skills, knowledge of the ARITA Code of Professional Practice (CoPP) and your ethics. The interview lasts for approximately 2 hours.

The committee consists of a:

• representative of ASIC

• registered liquidator chosen by ARITA

• person appointed by the Minister (for example, a barrister).

The committee must then decide within 45 business days after your interview whether or not you should be registered as a liquidator, you will however likely receive notice of the outcome in a much shorter time frame.

4,000 hours of relevant employment

As mentioned earlier, it can be particularly difficult for women to meet the requirement of 4,000 hours of relevant employment at a senior level in the five years preceding the application, particularly where there has been an extended disruption in employment.

ASIC understands that many women do take on extra carer duties, and as a result have career breaks for maternity leave and potentially return to work part-time. The reduction in work hours makes it difficult to meet the “relevant employment” metric within a 5-year period. ASIC in their Regulatory Guide specifically address the issue, and states that a shortfall will not prohibit the committee from registering the applicant, provided that the committee is satisfied that you would be suitable to be registered. I myself had around 3,300 hours of relevant experience in the prior 5 years, and the committee accepted my explanation and circumstances for the shortfall.

Whilst I have yet to apply for my registration as a bankruptcy trustee, I understand that the application follows a similar process, with similar allowances for experience hours.

For any prospective accountants looking to step into the world of insolvency and wanting to find out more about what a day in the life of a liquidator entails, or for any insolvency accountants looking to discuss their next career move, I welcome them to contact me for a chat.

[1] Insolvency statistics | ASIC

[2] AFSA’s positive discrimination makes inroads for female trustees | Accountants Daily