The 2023 Parliamentary Joint Committee Report and insolvency law reform?

While the federal government is yet to give its response to the PJC Report on Corporate Insolvency of July 2023, there is little to suggest that the industry and others interested have been working on any of the threshold issues that the Report says need attention to assist any law reform.    

It is approaching 12 months since the release of the Parliamentary Joint Committee’s Report on Corporate Insolvency, on 12 July 2023.  There has been no government response to the 28 recommendations of the Report.  Government responses to committee reports are required within three months of a report being tabled, in this case, by mid-October 2023.  As the APH website advises, “successive governments have affirmed their commitment to providing such responses”.[1]

As a reminder, the PJC made a number of recommendations for immediate reform, others in terms of gathering data to assist in considering foreshadowed reform, and others again for more comprehensive review: Corporate insolvency in Australia – Parliament of Australia (

While a government response is needed, it is not all up to government.

For example, ASIC has proceeded to review IPs’ reporting requirements under RG 16.  Its consultation paper [2] notes recommendation 19 of the PJC Report was that there should be a comprehensive review of the current statutory reporting obligations for insolvency practitioners and that in the interim ASIC should consider whether any timely changes can be made to the regulations on reporting thresholds and its response to insolvency practitioner reports. CP 377 says that the government “has not yet responded to the recommendations, however in updating RG 16, ASIC is also seeking to address the committee’s recommendations”.

As to small business insolvency, the Small Business Ombudsman continues to produce data as to the financial position and composition of small business; reporting on late payment issues, a 20 per cent increase in calls for debt advice, high levels of corporate insolvencies, in particular in the construction sector. The Ombudsman reports that 60% of small business is made up of sole traders, who fell outside the PJC inquiry.

Interested stakeholders could themselves be acting.

Aims of insolvency law

Some broad recommendations of the PJC were that a comprehensive review look at appropriate principles and objectives of insolvency law. That does not seem to have generated much or any “root and branch” debate among the insolvency community since July 2023.  The limited outcomes in most insolvencies may suggest a need to qualify the primacy of creditors’ interests in insolvency law and policy, including as to reporting requirements.[3]  The public interest reporting tasks of IPs, and their cost, is another aim that may need to be reconsidered, assisted by ASIC’s current review. The need to enhance the operation of the personal and corporate insolvency systems in the small business sector is another area of potential focus.


The PJC Report recommends that its proposed comprehensive review of insolvency consult researchers and industry to progress access to and analysis of insolvency data.  That recommendation itself might have prompted some groundswell of pre-emptive activity but it does not seem so.

That is so despite the PJC inquiry itself creating a momentum by extracting from the industry some financial disclosure of insolvency outcomes that is necessary before well directed reform can proceed.  For example, the PJC heard that preference recoveries invariably go back to the practitioner alone, as may well the fruits of other recoveries, which might impact the extent of their reform.  See my Why do we have preference recoveries in insolvency? – updated – Murrays Legal.  In so far as there is some data, in personal insolvency, voidable transaction recoveries produce only 5% of total recoveries.  The costs of litigation, including IPs’ time, is something about which we should know more.  It is for that reason that I have suggested that data be captured on the returns to creditors where moneys are recovered through insolvency law litigation Insolvency returns to creditors and other fictions – reissued March 2022 – Murrays Legal.

The need for data is supported by an IMF Working Paper – The Use of Data in Assessing and Designing Insolvency Systems [4] – to which the PJC had regard, the paper saying that insolvency legislation is typically designed or assessed without data recording the actual performance of the system, or the issues experienced in its application.

“The assessments and design of insolvency regimes should be based on relevant statistics, thereby providing the infrastructure for sound policy decisions.” 

As to Australia, data extracted or adopted by Jason Harris and myself on the SME insolvency sector shows, broadly, that there is much cross-subsidisation of fees, particularly in corporate insolvency, limited value of remaining assets in estates, minimal returns to creditors, continued creditor subsidy of work on behalf of the state, and an increasing proportion of estates being simply deregistered, as spent phoenix companies or otherwise.[5]  Hence our view that in corporate insolvency,

“what statistics are available reveal that there is not enough money remaining in insolvent estates to properly fund the costs of administrations, let alone pay dividends to creditors”.

AFSA data offers some indicators of how the system works.  For example, we know that registered trustees administered over $290 million in receipts in 2022–23 with asset sales accounting for 55%; voidable transaction recoveries were relatively minor at 6%.  Over $287 million was paid in that period, with secured creditor payments accounting for 24% and trustee fees accounting for another 27%. These figures can then be compared with previous years.

Larger insolvency matters bear separate scrutiny, for example as to the costs and benefits of deeds of company arrangement, in terms of the continuation of a viable business: DOCAs – should ‘not much of a return to creditors but better than the liquidation alternative’ be enough? – Murrays Legal

The IMF paper concludes in saying that data is needed to allow legislative change to be properly targeted to address specific problems in an insolvency framework.

“Legislating “in the dark” is an anomaly in the age of big data … ignoring how the insolvency system works in practice, and where its main challenges lie, can result in severe consequences for the economy, and it may render legal reforms ineffective”. 

The future

As to the PJC Report, the lack of response from government may be seen as disheartening and may explain the lack of industry activity since, in particular given the quality efforts of interested parties involved in the PJC process.

Nor was the PJC Report or insolvency law reform generally the subject of any comment at the recent May-June 2024 Senate estimates hearings.  Business insolvencies generally were raised, the Reserve Bank noting that they have not returned to pre-pandemic levels.

But perhaps it should also be recognised that, as came from the PJC Report, the insolvency system offers only opaque accountability, with limited data available to assess its effectiveness and efficiency, which then perversely diminishes its perceived significance and urgency for any reform. Any trading business operating with such limited access to operational information would probably end up insolvent.

More root and branch thinking and transparency from the industry would assist.


[1] Government responses outstanding to committee reports – Parliament of Australia (

[2] CP 377 Guidance for reporting by external administrators and controllers: Updates to RG 16.

[3] For example, A Comparative Analysis of the Australian and New Zealand Liquidation Schemes – Suggested Talking Points, Lynne Taylor, PJC Submission 74.

[4] WP/19/27, prepared by José Garrido (dir.), Wolfgang Bergthaler, Chanda DeLong, Juliet Johnson, Amira Rasekh, Anjum Rosha, and Natalia Stetsenko, February 2019

[5]  Murray and Harris, Rebuilding the structure of the Australian insolvency system (2022) 22 (1 & 2) Insolvency Law Bulletin 14.

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