It was November 2015 that the then government announced a proposed reduction in the period of restrictions of bankruptcy to one year. No change was made.
Since then, we have had COVID-19 and in the space of a week, in October 2020, the government announced and sought views on new laws for small business (corporate only) restructuring. These commenced in January 2021.
Meanwhile, similar small business reforms were proposed in bankruptcy in January 2021. Over 12 months later, more detail was released. Then there was a change of government in May 2022 and there has been nothing since.
That is, corporate small business reforms were introduced within 3 months (and it shows); personal sole trader bankruptcy reforms have waited, in effect, 7 years, with no outcome. Often with the same personnel, the same ineptness, bad luck or other reason for their business’ failure.
Perhaps the term bankruptcy is too coloured (“morally bankrupt”) and should be renamed as “insolvency” or “debt relief”. In fact the use of the term insolvency rather than bankruptcy in the 19th century is said[1] to have
“emerged when gentlemen were increasingly part of this large group and it was simply unthinkable for the up-stairs likes of Lord Grantham to be mentioned in the same sentence as a word, previously used for lowly tradesman. Presumably it was from this need for a softer alternative to “bankruptcy” that “insolvency”, a term amenable to the ears of the upper classes, came into existence”.
There is another reason bankruptcy reform languishes. Corporate insolvency is handled by Treasury, while personal insolvency by the Attorney-General and his Department (and it shows).
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[1] The Historical Development of Insolvency Law, Francis Forbes Society for Australian Legal History, the Hon TF Bathurst, Chief Justice of NSW, 3 September 2014.
