The Insolvency Service in the UK has issued an updated version of its Technical guidance for Official Receivers[1] in administering corporate and personal insolvencies. Australia has no real equivalent, certainly in corporate insolvency, and useful practice and legal insights and comparisons can be made.
The UK Official Receiver’s primary function is to administer and investigate the affairs of companies and partnerships wound up by the court and of bankrupts. It acts as liquidator of a company or trustee of a bankrupt’s estate if an insolvency practitioner is not appointed and as liquidator/trustee ex officio if there is a vacancy in that office. The official receiver remains under a duty to investigate when an insolvency practitioner has been appointed as liquidator or trustee. Australia has the Official Trustee in Bankruptcy, but we have no official receiver in corporate insolvency.
While Australia’s insolvency laws are necessarily different in detail, this Guidance is useful for the matters of principle it discusses in relation to the many common practice issues. It traverses topics ranging from dealing with the bankrupt’s family home and investment property, to trading stock, work in progress and plant and equipment, and monetary assets; public examinations and investigations; voidable transactions; assignment of claims; director misconduct; income payments, winding up and bankruptcy proceedings, and discharge and dissolution.
There is no equivalent document in Australia. AFSA’s guidance, while comprehensive, is more focused on the private profession of trustees in bankruptcy who administer about 15% of Australia’s bankruptcies, and less so on the Official Trustee which administers the remainder.[3] With no official receiver in corporate insolvency, ASIC’s guidance is solely directed to the private profession of liquidators.
In many respects English insolvency law is ahead of that in Australia and this UK guidance can provide useful assistance. As one example, Australian trustees need 3 years to administer a bankruptcy; in the UK, it is one year. Another more useful comparison is in respect of the comparative guidance on the assignment of rights of action – see OTPS6 – Choses in action | Australian Financial Security Authority (afsa.gov.au) and 37. Rights of action – Technical guidance for Official Receivers – Guidance – GOV.UK (www.gov.uk) .
The UK OR has a requirement for assignments to be absolute, and not allow terms allowing the OR to share in any successful proceeds of the claim; this is to avoid the risk of an adverse costs order in the event that the assigned claim is unsuccessful.[4] This compares with the terms of an assignment of rights of action under IPSC s 100-5 reported in LCM Operations Pty Ltd, in the matter of 316 Group Pty Ltd (in liq) [2021] FCA 324.
[1] Technical guidance for Official Receivers – Guidance – GOV.UK (www.gov.uk)
[2] [There is no [2].
[3] Official Trustee Practice Statements | Australian Financial Security Authority (afsa.gov.au)
[4] See generally Hunt v Harb [2011] EWCA Civ 1239
