With the rather confusing term ‘friendly liquidator’ continuing to be used:
- by the media: Dirty Deeds: Inside Australia’s Biggest Tax Scam – ABC News;
- reported in court decisions – “the boys will arrange a friendly liquidator who they pay off to liquidate the company. [X] knows plenty of dodgy liquidators”: R v Anquetil  NSWCCA 59 (9 April 2021) (austlii.edu.au),
- “Counsel submits that the comment by the respondent in a WhatsApp message … that [x] is “friendly” as opposed to Mr Francis and Mr Dalton, creates a perception of bias, whether or not it is accurate opinion of [x]’s demeanour”: Francis v Innes  NZHC 3354 (12 December 2022) (nzlii.org); and
- used by ASIC – “a ‘friendly’ liquidator, usually engaged by the pre-insolvency adviser who avoids their responsibilities by not investigating the affairs of the company, not recovering illegally removed assets or reporting their findings to ASIC and creditors”: Illegal phoenix activity | ASIC
it remains that however friendly your professional services might be, the word friendly should be avoided. Its pejorative connotation in the insolvency context is, perhaps thankfully, yet to enter the dictionaries. My comments of some years ago are recalled, below, for readers’ interest.
The friendly family doctor, dentist, and police officer properly convey what the term “friendly” means, that meaning going back to the days of Beowulf. But the word can be used sarcastically and pejoratively.
ASIC and the government use the term that way, most recently referring to situations where directors appoint a
“‘friendly’ liquidator to wind up a company, with the liquidator then not investigating suspect transactions in the liquidation process”.
That situation should more clearly be explained as one where, for example, a company liquidator acts unlawfully in administering the liquidation of the directors’ company, overlooking their theft of company assets, and finalising the liquidation quickly, and with some financial return on the side.
In the same way, a government officer might favour a family member, or a politician a financial supporter, with more serious misconduct involving bribery.
The recent use of the term “friendly liquidator” is found in the call for submissions by the Assistant Treasurer and the Minister for Employment on ways to deal with what they call “sharp corporate practices” in exploiting the Fair Entitlements Guarantee (FEG) scheme for employees of insolvent companies. The Ministers say that such practices are “not always strictly illegal”; others might disagree.
… the media releases of politicians, the writings of journalists and the ramblings of vexatious litigants
Sarcasm is not an appropriate means to convey a legal meaning, certainly in formal communications. Apart from the FEG side of government further demeaning the office of liquidator (see the Treasurer’s Insolvency Law Reform Act 2016), it is an example of the yellow press standard of explanation, found in the media releases of politicians, the news stories of journalists, the ramblings of vexatious litigants, and on this website, at times.
Clearer meaning required
If the government is saying, in the FEG or phoenix company context, that a director may appoint a pre-arranged liquidator to wind‑up a company with that liquidator then conducting a feigned investigation of suspect transactions or conduct, then it should say that.
This assumes in any particular case that there is no explanation for the liquidator’s minimal investigation, for example lack of funding, or that a larger investigation would not be proportionate to the expected outcome. While ASIC might spend over 30 court hearing days in achieving a $50,000 penalty against Mr Flugge, with no order as to costs, a liquidator would be criticised for doing so, even if it were possible on the funds available.
Friendly means friendly, for the moment
The debasement of the nice word “friendly” does not yet appear in the dictionaries, though, courtesy of the Australian government, it may soon do so.
We might then find that its new meaning is extended in a similar way to government officials, tax officers and politicians.