The Insolvency Law Reform Act 2016 introduced a stronger regulatory regime over insolvency practitioners. It may not have been noticed that this new law went so far as to regulate the conduct of practitioners while overseas.
The words “in a foreign country” now appear in s 40-40, in each of the Bankruptcy Schedule and the Corporations Schedule.
Thus, s 40-40 reads that a reason for a show-cause notice being issued by AFSA or ASIC can be that a trustee or liquidator “has failed to carry out adequately and properly (whether in Australia or in an external Territory or in a foreign country)” their relevant duties.
There is no explanation for the addition of those words, which did not appear in the prior law.
In a forthcoming article in the Insolvency Law Bulletin, I discuss how or whether Australian practitioners who are in ‘foreign countries’ pursuing investigations, whether under UNCITRAL Model Law authorisation, or under a ‘letter of request’, are regulated by the Australian courts and the regulators, and the industry bodies.
A series of international cases are explained where this and related issues have arisen.
Section 40-40 seems to put an onus on the regulators and the relevant industry bodies to have some process of monitoring or reporting on the international activities of practitioners. A pending decision concerning a liquidator may elevate that issue in Australia, which has been the subject of judicial focus in other countries.
In the meantime, we might think about how many Australian practitioners are, at any given time, acting overseas. A related issue, also discussed in the article, looks at the foreign representatives acting in Australia at any given time, and what role we have in their regulation.
2 Responses
I am just preparing some teaching notes for International Insolvency Law and read this. There is the potential for this to become a much bigger issue I would have thought.
The detail is contained in my article Cross-border regulation of insolvency practitioners — (2018) 19(3) INSLB 55, though it is based on a paper given to Federal Court judges in 2016.
As I say, our practitioners are increasingly engaged in overseas jurisdictions; and likewise foreign practitioners here.
There is also new potential for Australian-New Zealand regulatory intersections.