The government is proposing to amend only some of the insolvency law changes under the Insolvency Law Reform Act 2016 that have raised concern.
The remuneration approval process now proposed is that if an insolvency practitioner (IP) employs a staff member, and a “related entity” of the IP (their firm) gains from that, and the IP does not know, and could not reasonably be expected to know, that the firm would gain, for whatever reason, or the creditors think it is ok for the firm to gain, and so resolve, or it is “not reasonably practicable in all the circumstances” to obtain their agreement, by resolution, to the firm gaining, and the cost involved is reasonable, then, despite all this, even if the firm gains from the remuneration paid to the IP, or gains from the gain, it does not matter.
The need for this change was the subject of various discussions with ‘Canberra’, whose explanation for the initial (and continuing) convoluted process was that a political response was required to address the misconduct disclosed in ASIC v Ariff [2009] NSWSC 829. The Court there said that Mr Ariff admitted charging the CarLovers companies to which he had been appointed
“for overseas travel for himself and his family members, including travel expenses, accommodation charges and the like [which] had absolutely nothing to do with the business of the CarLovers companies”.
He also admitted to paying
“his family members large amounts of the companies’ money claimed to be for services to the companies but which had nothing to do with (those) companies”.
We all know that an extreme case is not a useful basis for introducing a general law that would seek to address a wider range of less extreme but more usual cases. But politicians like to be seen to be doing something, and this is the result. The amended provision is hardly better in that respect, save for insolvency practitioners seeking to have their remuneration approved, an important issue.
Apart from some other minor adjustments, more major concerns are not addressed in the Bill.
Submissions on the Insolvency Law Amendment Bill 2017 are due by 17 May 2017.
Insolvency Law Amendment Bill 2017 (No 1?)
The government is proposing to amend only some of the insolvency law changes under the Insolvency Law Reform Act 2016 that have raised concern.
The remuneration approval process now proposed is that if an insolvency practitioner (IP) employs a staff member, and a “related entity” of the IP (their firm) gains from that, and the IP does not know, and could not reasonably be expected to know, that the firm would gain, for whatever reason, or the creditors think it is ok for the firm to gain, and so resolve, or it is “not reasonably practicable in all the circumstances” to obtain their agreement, by resolution, to the firm gaining, and the cost involved is reasonable, then, despite all this, even if the firm gains from the remuneration paid to the IP, or gains from the gain, it does not matter.
The need for this change was the subject of various discussions with ‘Canberra’, whose explanation for the initial (and continuing) convoluted process was that a political response was required to address the misconduct disclosed in ASIC v Ariff [2009] NSWSC 829. The Court there said that Mr Ariff admitted charging the CarLovers companies to which he had been appointed
He also admitted to paying
We all know that an extreme case is not a useful basis for introducing a general law that would seek to address a wider range of less extreme but more usual cases. But politicians like to be seen to be doing something, and this is the result. The amended provision is hardly better in that respect, save for insolvency practitioners seeking to have their remuneration approved, an important issue.
Apart from some other minor adjustments, more major concerns are not addressed in the Bill.
Submissions on the Insolvency Law Amendment Bill 2017 are due by 17 May 2017.
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