Read the funding proposal for ASIC’s regulation of liquidators and understand why bankruptcy is so much more advanced. Corporate insolvency practitioners, lawyers and academics should attend the Rosie Traill Bankruptcy Conference on 14 November 2016, in Sydney, to find out how and why.
Bankruptcy is the poor relation of insolvency law, with more professional, academic and media attention given to the larger issues involved in a corporate collapse, and what is said to be the greater complexity; even though the reality is that most corporate insolvencies are assetless SMEs, the administration of which hardly meets the aims and purposes of insolvency.
Insolvency law reform in Australia has suffered as result of being under the influence of corporate insolvency law and its practitioners.
Maybe this is too harsh – the development of corporate insolvency has itself been impeded by it being looked down upon as the poor cousin of corporate law.
Put bluntly, but for the unhealthy influence of corporate insolvency on insolvency law reform generally, our insolvency laws generally would be far more advanced.
In the meantime, personal insolvency has quietly progressed on its own. Many of the changes in the Insolvency Law Reform Act 2016 are being made to bring corporate insolvency up to speed with personal. But corporate still has a long way to go. It has achieved little in addressing the aims of insolvency, and current proposals don’t go far.
It might pay to know and be part of the bankruptcy scene from which useful approaches can be adopted, like AFSA’s ‘industry’ funding.
What might have been
But for the weight of corporate insolvency we would have:
- An insolvency focused-regulator, not a ‘law enforcement agency’. A single insolvency regulator was recommended back in 2010 but was successfully resisted by many corporate practitioners. As a result, the ILRA has had to resort to requiring ASIC and AFSA to “co-operate with each other”. Compare the UK and New Zealand.
- A single government agency, not two Ministers, and departments, one with a law enforcement focus, the other with an economic focus. Compare the UK and New Zealand. Consequently the ILRA represents not a harmonisation, but the start of another separation, much based on the capabilities of the respective regulators
- A government liquidator. Compare the UK and New Zealand
- A legislative scheme without 19th century separations between voluntary and compulsory liquidations, and antique provisions harking back to Chancery days; still held on to by many of the laws of other former British colonies. Bankruptcy is less cluttered.
- Corporate insolvency information and statistics that inform us the value of assets realised by each administration, how much they cost, what creditors receive, what businesses are saved, what the government takes, and more. See the various bankruptcy statistics on AFSA’s website, for 2016.
- Co-administration arrangements between the regulator and liquidators in conducting examinations, in demanding documents, in getting in a directors RATA, and in offence reporting, and more.
- Streamlined non-litigation recovery mechanisms, for example s 139ZQ.
- On-line reporting, desk-top regulation, computer based operations, and more.
- A series of laws over the years that might have considered, recommended and been legislated, to meet new and developing issues. In bankruptcy, we have had reforms in superannuation, family law, debt agreements, income contributions, Part X agreements, debtors petitions, petition thresholds, and more. By comparison, in corporate, a judge in 2003 said that ‘Court’ should be changed to ‘court’ in s 588FGA, a slip that had the potential to cause injustice. In the ILRA, it is being remedied, but delayed until 2017 so that the profession can adjust.
There might even have been insolvent trading reform, and ipso facto regulation [in bankruptcy law since at least 1966].
All the more reason why insolvency practitioners – corporate and personal – should attend the Rosie Traill Bankruptcy Conference on 14 November 2016, in Sydney.
Hear about the Insolvency Practice Rules, voidable transactions, remuneration, the Famous Family Law experts, joint real estate, the obligations of AFSA and ARITA in discipline, trust property, personal insolvency agreements, dealing with ‘information’, and reviews of trustees’ decisions. And the workshop coverage of AFSA regulation, dealing with the ATO, possession orders, disclaimer, book debts, share sales, conflicts, deceased estates, ‘cranky creditors and challenging bankrupts’, income contributions, assets acquired with income, and ‘modern day relationships’.
Corporate practitioners might learn something to assist them achieve at least one corporate insolvency law reform.
They also might gain a perspective on the many other issues for which they only look to corporate insolvency to resolve, like the constitutional validity of examination summonses, before the High Court this week, or remuneration, or trusts, or industrial funding ….
