The International Association of Insolvency Regulators’ Annual Conference was held in England from 26-29 September 2022. Australia’s reported contribution to the conference and some current international and comparative insolvency law issues are here discussed.
The theme of the conference was ‘Post COVID – Recovery & Renewal in the Insolvency Profession’ and the conference “will seek to enable delegates to share experiences and learning as we develop our systems to provide insolvency support for individuals and businesses in a post covid world”. Its program is here: IAIR 2022 Conference (insolvencyreg.org)
The IAIR is “an international body that brings together the collective experiences and expertise of government insolvency regulators from jurisdictions around the world”.
Australia
Australia is a member of the IAIR through both AFSA and ASIC. AFSA is presenting at the conference on the need for diversity in the profession and the need for data in achieving regulatory outcomes. One recent promotion of diversity in Australia was the legislative broadening of the scope for admission as a trustee or liquidator, including to admit non-accounting-based practitioners and those registered overseas. As to data, see A productive insolvency regime – who knows? – Murrays Legal
As to a post-Covid world, Australia has little to show. Australian lawyers (not trustees) gave input to an international survey resulting in the joint INSOL, IAIR and World Bank report – “From Hibernation to Revitalization: Analysis of Insolvency COVID-19 Response Measures and their Wind-Down”. While the focus of the report was on the temporary measures introduced to assist businesses and individuals, changes of any substance for the future in Australia were limited. A small corporate business restructuring process under Part 5.3B Corporations Act was enacted in 2021, dealing only with corporate debt under $1m. Proposals to introduce comparable laws in personal insolvency to assist those impacted by continuing economic conditions, including to reduce the 3 + year period of bankruptcy to at least one year, did not proceed. Some tentative changes were made to allow on-line meetings.
Practitioner regulation
A comparative insolvency law issue arises from England’s current review of its co-regulatory system, by which practitioners are regulated by their recognised professional bodies. Under the Insolvency Law Reform Act 2016 (ILRA), Australia rejected that approach in favour of direct government regulation by ASIC and AFSA, with minimal input from industry bodies.[1]
In 2019, New Zealand opted for a version like that of England, based much on cost. The high costs imposed for ASIC’s regulation in Australia is under review. Separately, Australia’s insolvency regulatory and related laws are listed for review in 2022 although no announcement of the review has been made.
Australia’s dual regulatory system
In a recent paper given at the INSOL Academics meeting, solutions to address the claimed inefficiencies in Australia’s bifurcated regulatory system between personal and corporate insolvency were discussed. With law change deemed too difficult after decades of separate regulation, the combining of both personal and corporate insolvency law and practice under the one government minister was suggested as at least serving to provide consistency in law reform and regulatory approaches post Covid-19.[2]
SME insolvency
A related efficiency issue has been raised with Australia’s Productivity Commission, in the context of small business enterprise insolvency, by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), who has called for a co-ordinated approach to SME insolvency where corporate and personal debt and assets are invariably intertwined.[3] The World Bank and UNCITRAL has each made similar recommendations for the laws of member states. This does not appear to be a focus of the current review of personal insolvency laws in the UK.
International regulation
It does not seem that IAIR is a forum for practitioner regulation itself, in relation to the difficulties in the regulation of foreign representatives.[4] Australia’s regulators have responsibilities to regulate their practitioners operating outside of Australia, under changes introduced by the ILRA 2016. How this is done is not clear.
An international example is the conduct of a Russian official receiver whom the English Court found to be “in clear breach of his duty of full and frank disclosure” when he applied for and was initially granted a recognition order: Cherkasov v Olegovich [2017] EWHC 3153 (Ch).
As a separate issue, Russia was recently expelled from IAIR based on its members’ belief that “the current invasion of Ukraine by Russia goes against IAIR’s values of … mutual respect and international cooperation”. The motion was supported by 8 Executive Committee Members and 3 abstained; Australia is represented on the executive committee.
More?
The papers and outcomes of AIAR meetings are confined to its members.
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[1] Bodies everywhere — the role of professional bodies in regulating insolvency practitioners, M Murray Insolvency Law Bulletin, 2018.
[2] Improving the regulation of insolvency practitioners in the UK and Australia. Would a single regulator help? – IRep – Nottingham Trent University
[3] Submissions of the ASBFEO to the Attorney-General’s Department of 18 February 2021 about small business personal insolvency; and to the Productivity Commission of 5 April 2022.
[4] Cross-border regulation of insolvency practitioners, Insolvency Law Bulletin, May 2018, M Murray
