Insolvency Law Reform Bill 2015
Friday 11 December 2015 @ 12.20 p.m. | Corporate & Regulatory
The Insolvency Law Reform Bill 2015 was introduced into the Commonwealth Parliament in early December. The bill forms part of the Australian Government’s strategy to modernise and strengthen the nation’s insolvency and corporate reorganisation framework. The Bill will introduce major changes to insolvency law to innovate areas like insolvent trading as well as default periods for personal bankruptcies.
The Bill
According to the bill summary, the bill would create common rules to:
- remove unnecessary costs and increase efficiency in insolvency administrations;
- align the registration and disciplinary frameworks that apply to registered liquidators and registered trustees;
- align a range of specific rules relating to the handling of personal bankruptcies and corporate external administrations;
- enhance communication and transparency between stakeholders;
- promote market competition on price and quality;
- improve the powers available to the corporate regulator to regulate the corporate insolvency market and the ability for both regulators to communicate in relation to insolvency practitioners operating in both the personal and corporate insolvency markets; and
- improve overall confidence in the professionalism and competence of insolvency practitioners.
The Bill’s overall objective is to raise the standards of competence in the insolvency profession and to close the gap in the regulatory framework between registered liquidators and registered trustees. The Bill also contemplates the creation of a new Insolvency Practice Rule (yet to be released) which will be a critical part to the Bill and the reforms proposed by it.
According to the Assistant Minister to the Treasurer, Alex Hawke:
“The new measures in this bill are currently estimated to result in savings to the insolvency industry of $50 million per annum from the commencement of this bill, with positive flow-on impacts for creditor returns. These savings will be achieved while improving confidence in the industry, improving competition for insolvency services and enabling creditors and other stakeholders to better look after their own interests.”
The Bill represents the first substantial changes to the insolvency regime in over 20 years and should be welcomed by the profession as a step in the right direction towards modernising the current framework.
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Sources:
Insolvency Law Reform Bill 2015, Explanatory Memorandum and Second Reading Speech
Federal Government introduces Insolvency Law Reform Bill 2015
