With women comprising only around 10% of insolvency practitioners, the issue of gender balance continues to receive attention, among broader issues of diversity in that sector, and in the workforce generally.
The Turnaround Management Association (TMA) has recently launched its TMA Voluntary Code for Equitable Insolvency & Restructuring Appointments (EIRA) under which a Code adopter would need to actively consider whether there are qualified women who could be appointed to given roles. The TMA Code is launched “given the widespread acceptance of the Law Council of Australia Equitable Briefing Policy …” which itself was adopted by the Commonwealth under its Legal Services Directions 2017, among other diversity initiatives.
As to “what problem are we trying to fix?”, TMA reports that as at 30 June 2024, only 10% of the 650 odd registered liquidators nationally were female, this being “unacceptable”.
The EIRA is said to be proposed as part of a suite of initiatives by the TMA intended to increase the engagement and retention of women in restructuring and turnaround.
The TMA quotes the July 2023 PJC Report’s comment on that percentage that “there are clearly broader cultural or systemic issues at play, and they must be reflected on and addressed”. The PJC took up submissions that suggested the requirement of 4000 hours of experience over a certain period to be registered as a liquidator was an impediment, although as ASIC has recently pointed out, that is a condition that may be waived.[1]
The TMA refers to certain “deterrents” to women becoming registered liquidators and a newspaper report also relays the TMA message.[2]
Although the government is yet to respond to that 2023 PJC report, reflections on the broader cultural and systemic issues, and how they might be addressed, have been around for some time, within broader issues of diversity generally, though perhaps receiving less attention than gender gaps in other areas.[3]
The 10% or thereabouts is a generally accepted overall figure, although closer academic analysis is available,[4] including on a firm-by-firm basis.
Why does it matter?
Without revisiting the various issues covered on this website, including as to whether gender parity matters and if so how and why, it is said that the industry should better reflect the communities that it serves, that having a diverse and inclusive profession which reflects the community makes, it is said, “sound business and ethical sense”. That rationale goes beyond issues of gender. Reasons then go further in saying that female approaches are different and perhaps better and that their absence or lower proportion limits the effectiveness of the industry.
These issues go well beyond a lawyer’s expertise. As much as is offered here is that, as I have reported, a current Parliamentary Joint Committee inquiry concerning alleged misconduct in the major accounting, audit, and consultancy firms has heard[5] about ‘masculinity contest cultures’ as reasons for the inquiry’s concerns. That and other debates suggest that female practitioners bring a different perspective to insolvency practice than men, pursuing ‘feminist ideals of ‘inclusion, connectedness, social justice and the flattening of hierarchies’, and a ‘disinclination to enjoy football and golf’ … The masculinity mindset is said to dismiss or trivialise compliance with codes of conduct, ethical practices, internal institutional controls as well as respect for customers, teamwork, and restraints on the use of devious or manipulative behaviour. Women are said to take “a more listening, understanding approach … less confrontational …”.[6]
The PJC is yet to issue its report.
What is being done
As to what might be done, back in July 2021, the personal insolvency regulator, AFSA, in the Attorney-General’s Department, instituted a policy whereby female bankruptcy trustees were offered 20% of all estates handed out by the government Official Trustee in Bankruptcy. This approach was in line with arrangements already then in place to direct Commonwealth legal work to female counsel, pursuant to the Legal Services Directions 2017.[7] Bankruptcy Act provisions supported the implementation of that arrangement.[8] AFSA says its target of 20% has been reached[9] and that, as at 2022, the program remains under review.
The law and the insolvency industry tend to keep personal insolvency divided from corporate insolvency, and corporate restructuring. The TMA does not refer to this policy of AFSA. Personal insolvency is less relevant in turnaround management although many of its members would be bankruptcy trustees or otherwise exposed to personal insolvency.
Perhaps the more significant divide is that AFSA’s initiative comes from the public sector, AFSA itself and the Inspector-General in Bankruptcy, in support of the 200 or so registered trustees in bankruptcy and, as explained, as an extension of the Commonwealth’s broader gender-based focus.[10]
In contrast, corporate insolvency has no equivalent public sector and public interest focus, it being reliant on private industry and firm culture, and without legislative support. The PJC’s findings in respect of the major accounting firms may be of interest. TMA’s voluntary effort should be seen in that context.
AFSA says it consulted widely with the private industry prior to launching its policy although that does not mean it is without its critics.[11]
ARITA also through its Balance Taskforce offers a useful focus on improving diversity among its private sector members, focusing initially on gender and age, and across both personal and corporate insolvency.[12] It describes working towards gender equality as “difficult” for many private firms and a “challenge”. Its rather distant goal is one of having 40% female liquidators and bankruptcy trustees in private firms by 2030.
Comment
There is a range of issues involved in gender diversity, most debated in realms of sociology and psychology, extending to issues in economics of comparative business acumen.[13] Gender essentialism and occupational segregation in insolvency practice is a good insolvency focused study, though noting its conclusion as to the limitations of diversity-orientated policies and as to the complexities of formulating transformative agendas.[14]
The more debate and data the better. For example, we are told that the proportion of female insolvency practitioners in New Zealand has doubled to almost 20% in the past six years.[15] Their rights to practise in Australia may assist.[16]
Lawyers and then again public lawyers have high female participation rates,[17] such that opening up the qualifications required to be an insolvency practitioner to professions and experience backgrounds with less of a gender imbalance may be one option. While focus is given to the fact that a person may be registered as a liquidator even if they do not have the requisite number of hours experience, a person may also be registered even if they do not have the requisite accounting qualifications, provided that they are suitable to be registered: s 20-20(5). That added flexibility for registration committees was based on the need to encourage “greater diversity of practitioners into the field, and greater resilience of the sector”: EM to Corporations Amendment (Corporate Insolvency Reforms) Bill 2020.
The PJC may report on accounting firm culture such that regulation of firms rather than individuals may also be considered.
There is also the unlikely question that has been asked as to whether the underlying reasons for the gender disparity lie in the fact that women as a group are simply uninterested in insolvency work,[18] such that what has been described as an engineered process may not work,[19] or whether women do in fact face barriers to entry.
Whatever, TMA’s approach of simply pushing ahead with its EIRA Code is understandable, given what are the complex issues involved. But it should at least have the impact of its Code monitored and its outcomes evaluated.
As to monitoring, AFSA said in 2022 said that, in relation to its process of referring a percentage of estates to trustees, it would “consult regularly with stakeholders and report at least annually on outcomes”. That report, when it appears, may be useful.
More
Meanwhile, discussions will continue. Some 30 or so past comments on the issue of gender are at this link: Search Results for “gender” – Murrays Legal
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[1] A committee may decide that an applicant should be registered—even if the committee is not satisfied that the applicant has the qualifications, experience, knowledge and abilities prescribed—provided the applicant is suitable to be registered as a liquidator: s 20-20(5).
[2] ‘Shocking statistic’: Only 10 per cent of liquidators are women. They’re getting impatient, Sydney Morning Herald, Jessica Yun, 23 September 2024.
[3] This “seems to have received less attention than gender gaps in other areas in Australia”: The gender gap among Australian liquidators (2022) 22(3&4) INSLB 54 at 58, Dr P Fishman.
[4] The gender gap among Australian liquidators (2022) 22(3&4) INSLB 54, Dr P Fishman.
[5] Parliamentary Joint Committee inquiry into Ethics and Professional Accountability concerning alleged misconduct in the major accounting, audit, and consultancy firms. SCoLA – The Society of Corporate Law Academics
[6] Search Results for “gender” – Murrays Legal
[7] Under the Judiciary Act 1903.
[8] Section 181A.
[9] Section 156A Beta Review March 2022, AFSA, referring to s 156A Bankruptcy Act.
[10] Query also the Sex Discrimination Act 1984.
[11] Peter Gosnell, ‘Less Than One In 10 Liquidators Female’ in Insolvency News Online (9 March 2022) <https://insolvencynewsonline.com.au/less-than-one-in-10-liquidators-female/>;
[12] Diversity and Inclusion (arita.com.au)
[13] Companies run by women are less likely to go insolvent than companies run by m – Lloyds Bank British Business Excellence Awards
[14] Joyce, Y., and Walker, S. P. (2015) Gender essentialism and occupational segregation in insolvency practice. Accounting, Organizations and Society, 40. pp. 41-60.
[15] Gender, and diversity, in insolvency practice, continued – Murrays Legal
[16] Regulatory Guide 258 Registered liquidators: Registration, ongoing obligations, disciplinary actions and insurance requirements (RG 258).
[17] Aussie solicitors are now ‘younger, more female and more diverse’ – Lawyers Weekly
[18] “It is hoped that this article will encourage future research into the underlying causes of the gender disparity among LRAs. For instance, are women disinterested in this line of work and/or do they face barriers to entry?” The gender gap among Australian liquidators (2022) 22(3&4) INSLB 54 at 58, Dr P Fishman.
[19] Peter Gosnell, ‘Less Than One In 10 Liquidators Female’ in Insolvency News Online (9 March 2022) <https://insolvencynewsonline.com.au/less-than-one-in-10-liquidators-female/>;
