The Australian Securities and Investments Commission has banned Michael Ian Davey from managing corporations for two and a half years.
The ban comes after two companies managed by Davey entered liquidation; A4dable Geeks, previously known as supergeek.com.au; and Refractory Construction, previously called Total Refractory Management.
According to ASIC, the decision was the result of information found in the reports provided by the liquidators of the failed companies. ASIC was concerned that Davey had engaged in illegal phoenix activity, failed to prevent the companies from trading while insolvent, failed to ensure the companies paid their taxes and failed to discharge his duties as a director.
The ban took effect on 21 January 2017.
Davey explained to CRN that Refractory Construction had four other partners and he saw himself in a position where A4dable Geeks was effectively funding Refractory Construction. That was when he took over the company.
Davey said that Supergeek later had to be wound up following an "accountant stuff up". This was when he moved assets to a new company.
Davey told CRN that ASIC had an entire legal team and he realised there was no reason fighting as he had already spent thousands in legal proceedings.
The administrators of Davey's former companies had been previously investigated by ASIC. In June 2015, the Companies Auditors and Liquidators Disciplinary Board admonished Jonathan Paul McLeod, the principal of McLeod & Partners for conduct regarding companies administered by the firm from 2008 to 2012.
Davey told CRN that documents he signed contained empty fields, which he failed to make sure were crossed preventing data to be included after he'd seen the document. Davey claims the "hundreds of thousands" claimed as debts were not accurate.
ASIC Commissioner Peter Kell said: "Directors need to be vigilant when it comes to managing companies and need to discharge their duties both lawfully and ethically. Where they fail to do so, ASIC will take steps to protect consumers and creditors from such directors by disqualifying them from managing companies."
Davey appealed to the Administrative Appeals Tribunal (AAT) for a stay against the disqualification on 8 February.
On 7 March, the former director further requested a confidentiality order against the publication of his disqualification, which is still before the AAT, and his AAT appeal. The AAT dismissed Davey's appeal regarding the stay and confidentiality orders on 9 March 2017.
A supergeek.com.au web page is still up, although this company is registered under a different ABN from A4dable Geek; it is called Davey Sg and is also registered in Brisbane and under external administration.
However, this company had entered into a deed of company agreement (DOCA) and has fully complied with all its obligations. The company expects to have its status with ASIC updated to show the company is not under external administration.
Section 206F of the Corporations Act allows ASIC to disqualify a person from managing corporations for up to 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 the company’s inability to pay its debts.
ASIC maintains a public register of banned and disqualified people with information about people who have been disqualified from involvement in the management of a corporation, disqualified from auditing self-managed superannuation funds (SMSFs), or banned from practising in the financial services of credit industry.
Updated 3:04pm, 20 March to show supergeek.com.au is expected to be removed from external administration as it has fully complied with the deed of company agreement in October 2015.