Explained: The ASIC Assetless Administration Fund – part 2 Asset Recovery

This article discusses the Asset Recovery Grant. The article assumes familiarity with our previous article [link here] regarding director misconduct. Most principles of the first article also apply to the Asset Recovery Grant. However, there are some differences regarding eligibility and the assessment criteria.

There are two options for funding under the Asset Recovery Grant:

  • preliminary action; and
  • legal action.

Preliminary Action

This provides funding to undertake preliminary activities to determine whether recovery proceedings are appropriate. Preliminary activities include:

  • public examinations;
  • warrants to search for, and seize, company’s property or books; and
  • determining the prospects of recovery by way of written legal advice.

Legal Action

This option provides funding to undertake legal proceedings to recover assets.


The asset recovery grant requires a liquidator to have formed a reasonable belief that misconduct occurred which caused the dissipation of the company’s assets. The dissipation of assets is the only distinction between this grant and the misconduct grant.

Assessment criteria preliminary action

ASIC generally will not fund a recovery action if:

  1. no misconduct is involved (examples of misconduct are: breaches of directors duties, misuse of company funds, trading the company while it is insolvent, fraud, or misuse of company assets) ; and/or
  2. there are insufficient assets that may be recovered to provide a ‘more than negligible return’ to creditors.

In addition, applicants should identify assets that may exist which can result in a recovery for creditors. Where a claim against the director or a third party has been identified, their capacity to satisfy the claim should also be identified.

Application process times

The time it takes to assess an application for funding has been reduced and applications can be assessed within a month.

More than negligible return

There are no published criteria as to what constitutes a ‘more than negligible return’. The dictionary defines negligible as of very little importance or size and not worth considering. This would rule out matters where the recovery is not likely to result in a dividend.  In matters were funding is likely to result in a return to creditors, the question then becomes whether it meets the ‘value with relevant money’ proposition from the first article. The funding spend should be weighed up against the likely return. It will be hard to achieve ‘value with relevant money’ where the funding spend is significantly greater than the return.

Assessment criteria legal action

The assessment criteria for preliminary action and legal action are largely the same. However, ASIC will not fund a legal action without a reasonable prospect of success. Also, ASIC will have regard to the availability of other funding sources (i.e. litigation funders, FEG, or other creditors).

ASIC will generally not consider funding the legal action if the limitation period of the legal action is due to expire and there is no reasonable basis for the liquidator to apply to the Court to extend the limitation period. If the limitation period is soon to expire applicants should provide an explanation as to why the Court may extend the period.


Unlike the grants considering misconduct, there is no requirement for a supplementary report under s533(2) of the Act. All that is required is a brief report detailing the outcome.

To maximise prospects, the following matters should be addressed:

  • misconduct which causes the dissipation of assets;
  • assets and/or claims;
  • capacity of parties to settle claims;
  • whether there is a likely return (more than negligible);
  • seek prospects advice; and
  • cover off any other sources of funding.

Taylor David has been recognised as a leading insolvency and restructuring firm every year since 2019 by Doyles Guide. Adam Carr, an Associate with Taylor David, was previously a lawyer at ASIC, where he played a pivotal role in contributing to the management of the assetless administration fund. We are well placed to assist in the AAF space, whether it be assisting on applications, conducting public examinations, providing prospects advice, recovering assets or the preparation of supplementary reports.

Please contact us should you require any assistance applying to the AAF.  We are open to assisting on a speculative basis in certain circumstances.

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