In my preparation for a panel discussion at the major AIIP Insolvency Conference in Canberra on the future of insolvency, my conclusion is that our insolvency regime should go into Part 5.3A administration, and be restructured under a deed, allowing the regime to cast aside its many inefficiencies, and to emerge anew as a streamlined 21st century operation.
Some elements of the deed are proposed but these may need refining, and others added.
That recommendation comes from a focus on its lack of economic transparency, unclear separation of roles, inadequate resources and on the inadequate ability of those in commerce to have free access to corporate and business data.
Only when the restructure of the regime under the deed is put in place can we then examine the core issues in insolvency law – asset recoveries and sales, creditor claims, priority rights, powers of examination and more.
This is not blue sky, there are many international precedents to work with. And the inevitable response of cost should be addressed by an economic analysis of the flow through benefits – the impact on phoenix and other corporate and tax misconduct; and assessed in the same way that open access to data, as one example, is shown to produce a substantial business, monetary and community return.
The thinking process is not over, and tax is yet to receive attention, but this table is a start.
|The proposed structure of Australia’s insolvency regime for 2025|
|What we need||Benefit||Examples|
|1. TIP, The Insolvency Platform – an on-line platform for the administration of all insolvencies.
|Accessible to all in set degrees; no reporting; regulator oversight; costs and efficiency savings||Sweden, Finland, China, and potentially AFSA.|
|2. A statutory government trustee – Australian Insolvency Authority (AIA) – all appointments are under that name
|Statutory basis for the IP role, and separation from the court; qualified government indemnity||England and the Official Receiver; New Zealand; the US.
|3. A private profession of accountants, lawyers and others who act on delegation from AIA to work for creditors
|Professional expertise but with statutory authority||England, New Zealand.
Senator Williams’ 2010 Senate report recommendation 13
|4. An open public data base of corporate and individual business registrations and activity, identifications of individuals, and a register of beneficial ownership including trusts
|Sunlight is a great disinfectant, transparency support commercial integrity||England’s Companies House|
|5. Remuneration and funding||Private profession must be paid, either direct from the assets, or other funding, for creditor work; it must also be paid for investigations for the AIA for investigation and prosecution work.||Any jurisdiction with a government liquidator|
|6. AIA is also the sole regulator of IPs on a co-regulation basis
|Insolvency is indivisible, and co-regulation is more effective and is cheaper.||England, New Zealand
Senator Williams’ 2010 Senate recommendation 1 for the AIPA
|7. AIA oversees and enforces conduct and compliance of bankrupts and directors, or by delegation to IPs
|8. AIA ensures data collection and analysis
|Unlike now, we need to know what we are achieving, or not||England, New Zealand
Senator Williams’ 2010 Senate report recommendation 17
As to the Insolvency Platform, or Portal see TIP.
E&OE in relation to the English and New Zealand arrangements.