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 is so much time given to anticipate the new law, until September 2017, under the Insolvency Law Reform Act 2016, attention should be given to implementing on-line and cloud based approaches to reporting and communicating.
It is reported that assistance with the new law along those lines was raised by a group of smaller practitioners with ARITA some time ago, as being a benefit that it could offer the profession during the lull up to September 2107. That group has now had the issue raised in parliament by Senator Williams, during a PJC inquiry into ASIC, on 25 November 2016.
The Senator said that “with the new insolvency laws, every insolvency firm must update its precedents and templates. This is a massive and costly task”.
The Senator referred to a group of 40 independent small liquidator firms which is enlisting the creation of one set of templates, saying this is “an industry first” and that this will “save ASIC work”.
The Senator asked ASIC if it was prepared to work with the group to develop these templates.
ASIC said it was happy to do so, also referring to what was understood to be ARITA’s work in “updating their forms in a similar fashion”.
Whether such a “massive task” is involved is doubtful, in particular given the long period of delay before the law commences. AFSA and the personal insolvency profession have readily dealt with many changes in bankruptcy laws and processes over the last ten years, and AFSA itself is rapidly moving on-line in relation to many aspects of personal insolvency administrations.
And putting this in context, if one were to aim for a model it would be that of Finland – ranked number one in the World Bank insolvency ratings, overseen by the Office of Bankruptcy Ombudsman. Its KOSTI (konkurssien ja yrityssaneerausten tiedonhallintajärjestelmä or Bankruptcy and Company Reorganization Information Management System) inputs data on all new bankruptcy and company reorganizations. The system creates a debtor profile and updates the profile automatically with data received from the liquidator/administrator and the Ombudsman. Creditors can register on the system online. This allows communication between the practitioner and the creditors, the filing of proofs of debt and distributing and managing other legal notifications and documents. The Ombudsman conducts its supervisory work by direct access to KOSTI.
And English insolvency law is in fact now moving away from “forms” to “information”, to be provided on-line by insolvency practitioners, in 2017.
At one level the idea of a common set of forms and precedents for all insolvency is fine, but is rather pedestrian in its aims.
It may only serve to perpetuate the forms based focus of ASIC, and the government. Some will recall Palmer’s Company Precedents of 1938, written for the 1929 Companies Act in the UK, with an Australian edition useful in its day, but not now.
While accountability and transparency is important, the more efficient and streamlined its capture and reporting, the more insolvency practitioners can attend to their main tasks of dealing with and perhaps saving an insolvent business.
But the reality will remain that corporate insolvency is constrained by excessive regulation.
An example is ASIC’s 13 separate flowcharts to “help external administrators meet their obligations and know the order in which forms must be lodged”. One of these, the creditors’ voluntary liquidation flowchart, lists 13 steps, requiring discretionary or compulsory lodgment of a large number of statutory forms, as well as publication, with over 5000 words of guidance.
It would be best to review this excessive regulation before working on forms.
Then, whatever is required to be lodged should at least be capable of on-line processing, that simply allows records to be updated rather than reinvented. AFSA’s Debt Agreements Online and its AER Online ares the type of technological assistance to which any outcome should aspire.
AFSA may be able to assist ASIC on this project, and assist the group of practitioners mentioned.
But for the moment, cloud computing and anything approaching the model of Finland is too far for Australia’s limited technological focus, and thinking.