Regulator reports on the high standards of insolvency practitioners, but …

The final report of the year 2016 on the standards and performance of the insolvency profession is rather impressive. Our 291 personal insolvency practitioners: recovered or realized $570 million in assets during 2015-2016, of which $235 million (41%) was paid in dividends to creditors; at a cost in remuneration of $142 million (25%). Any complaints? In […]

Senate inquiry

On 29 November 2016, the Senate referred the following matters to the Economics References Committee for inquiry and report by the last sitting day of the autumn sittings of 2018. The regulatory framework for the protection of consumers, including small businesses, in the banking, insurance and financial services sector (including managed investment schemes), with particular […]

The Culleton bankruptcy

Mr Rodney Norman Culleton, a federal politician, was made bankrupt by the Federal Court on 23 December 2016: Balwyn Nominees Pty Ltd v Culleton [2016] FCA 1578.  In formal words, the Judge ordered that “the estate of Rodney Norman Culleton be sequestrated under the Bankruptcy Act 1966 (Cth)”. The Judge went on to order that “there […]

The new effects test – and banks financing of distressed businesses

The government has introduced the Competition and Consumer Amendment (Misuse of Market Power) Bill 2016 into parliament which would implement the Harper recommendations on section 46, including the introduction of an ‘effects test’. The Bill has now been referred to the Senate Economics Committee for review, with submissions due by 9 January 2017. The Committee […]

Insolvency law reform – some harsh words

Murrays Legal recently reported a comment that our new insolvency law arriving in 2017 was the worst insolvency law reform we have seen. This prompts me to repeat my view that, if this is the case, it is largely the result of the unhappy domination of insolvency reform by corporate law over the years. But, perhaps contradictorally, I repeat […]

Insolvency Practice Rules 2016 released – Corporations and Bankruptcy

The Insolvency Practice Rules (Corporations) 2016 have now been released, without fanfare, and are on the Federal Register of Legislation.  The Insolvency Practice Rules (Bankruptcy) 2016 have since followed.  They are both here. These generally accord with the drafts released for comment. They do not appear to have taken into account the more substantial issues raised in some […]

ASIC’s data – the sale is off; now for some decisions….

The government has announced that it is not proceeding with the private sector bids to upgrade and operate ASIC’s registry functions. The bids were said not to have delivered “a net financial benefit for the Commonwealth”. Indeed, though how the government measured that benefit in the first place is problematic. This outcome was expected in light […]

Review of APES 330 – Insolvency Services

When the Accounting Professional & Ethical Standards Board (APESB) updates APES 330 – Insolvency Services to take account of the new insolvency laws, it may need to give guidance on the responsibilities of accountants sitting on disciplinary committees and on their handling and use of confidential disciplinary information.   The APESB originally issued APES 330 in September 2009. Since […]

Are accountants, and lawyers, prepared for NOCLAR?

The APESB has released a draft of new section 225 of the Code of Ethics for Professional Accountants, APES 110, for comment by 15 March 2017. This section deals with NOCLAR, “non-compliance with laws and regulations”, and the obligation on an accountant to report or respond to that non-compliance detected in a client or third party. […]

Prepacks – useful for law and accounting firms going under?

ASIC was recently asked in parliament for its views on “prepacks”, or pre-packaged insolvency administrations, with understandably cautious responses given.  A law reform recommendation to allow pre-appointment sales remains with government. When or if it comes to decide, the government will need to see how other countries have progressed on this issue, with the possibility […]

Leave to sue despite a cross-border insolvency stay

Leave has been given by the English High Court for a claimant to continue proceedings against STX, a Korean ship building company despite its entry into bankruptcy protection under Korean insolvency law. The proceedings were well advanced and raised complex issues where English law was not clear – as to the legality of  ‘side agreements’ […]

Sharing contempt penalties with liquidators and trustees

New Zealand courts will divide up fines imposed on directors or bankrupts for contempt for failure to assist insolvency practitioners, half going to the government and half to the practitioner, in recognition of the need to compensate the estate for the time and cost occasioned by the conduct on which the finding of contempt is […]

Senator Williams and the Finnish model of insolvency

A group of small insolvency practitioners has had raised in parliament its project aiming at a universal and consistent approach to the insolvency reforms commencing in 2017, described by Senator John Williams as “an industry first”. The need for insolvency to adopt efficient computer based processes was raised in my earlier comment, saying that now that there […]

Employees’ super – why trust the employer?

The Economics References Committee is to report by 22 March 2017 on various issues concerning the non-payment of superannuation by employers for their employees.   The superannuation guarantee charge (SGC) is levied on employers who fail to make payment of superannuation contributions to their employees’ designated funds. A Melbourne University report, discussed below, reveals that […]

Red Tape Committee and the words of Montesquieu

Montesquieu’s words from the 18th century – “les lois inutiles affaiblissent les lois nécessaires” – are often quoted in the modern context of the need to reduce “red tape”. That is, the idea of “useless laws weakening the necessary ones” is said to be an impact of too much red tape clutter in our laws that only […]

India’s new insolvency professionals regime

A major new insolvency regime commenced in India in May 2016. It introduces co-regulation of insolvency practitioners – IPs – through direct regulation by their professional bodies – IPAs – which themselves are regulated by a government agency, the Insolvency and Bankruptcy Board of India.   This is the English model, and likely to be the New Zealand model of insolvency […]

An expansion of the Banking Code, or is a change in the law needed?

The story about the conduct of bank officers in the Sydney Insolvency News prompts my suggestion for a widening of the banking code, or even a banking code. Similar “stories”, including my own, support this. SiN reported the story as “Grant Thornton Excoriated over Arrium”, GT being an accounting firm and Arrium being a mining company in […]

European Commission proposes new approach to business rescue in Europe

On 22 November 2016, the European Commission presented a set of new European rules for business insolvency which member states are to implement.  These include similar restructuring approaches to those being considered in Australia, a focus on fostering entrepreneurial business conduct, and a need for the proper regulation and training of insolvency practitioners, including their […]

the Sakr Nominees appeal and well beyond …

Whatever is said in the pending NSW Court of Appeal decision in Sakr Nominees, it is timely to propose that, just as the government is assessing how to fund ASIC’s insolvency role, a similar but broader assessment is needed in relation to the funding of the insolvency system itself, from an economic perspective. Any developed country […]

Mad Dogs could not legally perform its contract in breach of insolvent trading laws

An insolvent company cannot legally continue to perform its contract by which debts are incurred. Hence it has no claim for repudiation of the contract by the other party. Gilligan’s Backpackers conducted a hotel business in Cairns. Mad Dogs was under contract to supply food and catering services at the hotel. On 26 September 2007 […]