“Record penalties” imposed … against insolvent companies
While much is made of the “record penalties of $438m” penalties imposed on the Phoenix Institute and related companies for egregious conduct in relation to the sale of training programs – see Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (Subject to Deed of Company Arrangement) (No 3) [2023] FCA 859 […]
ASIC beleaguered – updated
Updated 29 July 2023. Given the number of current and on-going inquiries into ASIC, it is as if the regulator were a wild renegade, calling for constant review and attack. One might have some sympathy for ASIC’s position. To keep track of these inquiries, this is a list of the current or on-going reviews of […]
Liquidator remuneration is “a perfect example of the many competing interests that arise in a liquidation” …
and is “indicative of broader systemic factors within the insolvency system itself …”. The recent PJC Report on corporate insolvency recommended that [13] the proposed comprehensive review of insolvency law consider the remuneration of insolvency practitioners, describing remuneration as “a perfect example of the many competing interests that arise in a liquidation.”[1] The review should […]
What does our insolvency system produce? [re-issued July 2023]
31 March 2022 Many of us who call for a major review of our insolvency laws must know that the data on the performance of those laws is quite limited, certainly in the area of the majority of insolvencies, the small to medium enterprises (SMEs). The government won’t act. Why would not the industry itself […]
Looking more at deregistered companies
“Enforcement agencies have long been aware of the role that the abandonment [deregistration] of companies plays in illegal phoenix activity. In 1995 the Australian Securities Commission (ASIC’s predecessor) estimated that 92 per cent of phoenix companies at the time were being deregistered under the ASC’s s 574 program (the predecessor to s 601AB of the […]
Thoughts on the PJC’s Corporate Insolvency Report
The Parliamentary Joint Committee on Corporations and Financial Services (‘PJC’) handed down its Report into Corporate Insolvency in Australia on 12 July. The Report contains 28 recommendations spread over 14 chapters and runs to over 350 pages. The PJC inquiry has been very thorough, with 78 written submissions (including a submission by ourselves), 5 days […]
Offence reporting by insolvency practitioners
What is said to be the limited response by ASIC to corporate misconduct reports by liquidators is the subject of some on-going attention. Recommendation 19 of the July 2023 PJC Report on corporate insolvency was that any comprehensive review of insolvency law should consider whether the current statutory reporting obligations for insolvency practitioners are best […]
UK insolvency practitioners to come under direct government regulation
At the same time that the chair of the Australian PJC inquiry into corporate insolvency, Senator Deborah O’Neill, said that self- or co-regulation of insolvency practitioners (IPs) is one way of reducing the extent of government regulation,[1] the UK has decided to do away with its co-regulatory approach in favour of direct government regulation of […]
Gender, and diversity, in insolvency practice, continued
The July 2023 PJC report into corporate insolvency[1] makes recommendations on the “problem” of the limited female representation among liquidators, around 10%, noting that “there are clearly broader cultural or systemic factors at play [which] must be reflected on and addressed”. One broader recommendation, not necessarily focused on gender, is to reduce the 4,000 hours […]
UK’s review of its 2020 insolvency law reforms, with Australia compared
The quality of a recent UK review of its 2020 insolvency law reforms is compared with the approach taken in Australia. In my comment of June 2020 on what was to become the Corporate Governance and Insolvency Act (CIGA) in the UK, I explained its proposed introduction of a moratorium on creditor claims, a prohibition […]
Cancellation of a liquidator’s registration
While England is still deciding whether to change its system of insolvency practitioner regulation from one of co-regulation by professional bodies to one of direct government regulation, as in Australia, an example of the latter is a recent decision of a statutory disciplinary committee cancelling the registration of a liquidator. The defaults, though serious, were […]
Increase in Australian insolvency numbers
Personal insolvency numbers show a continued increase in numbers but still well below past figures; on the other hand, corporate insolvencies are just approaching pre-COVID-19 levels. Compulsory (court-appointed) bankruptcies and liquidations remain low. The construction industry is prominent in both personal and corporate insolvency numbers. The latest personal insolvency statistics for May 2023[1] show a […]
Should the firms of insolvency practitioners be regulated, along with the practitioner?
While Australia is currently focusing on the standards of conduct of accounting firms, and their partners – see Ethics and Professional Accountability: Structural Challenges in the Audit, Assurance and Consultancy Industry – Parliament of Australia (aph.gov.au) – it is pertinent to note that England is looking at extending the regulation of insolvency practitioners (IPs) to […]
Personal insolvency statistics – March quarter increase; April monthly decrease
There is good and bad news in the latest personal insolvency statistics from AFSA. March quarter increase The full March 2023 quarter numbers show an unfortunate increase of 12.6% over the same quarter in 2022 with a total of 2,494 new insolvencies recorded – and a 7.5% increase compared to the December quarter 2022. Quarterly […]
The respective complexities of corporate and personal insolvency
A question on notice of 1 March 2023 was asked by the chair of the Parliamentary Joint Committee on Corporate Insolvency in relation to what was referred to as an “implied difference” between personal and corporate insolvency – that there is a lot more money in corporate insolvency and that it is the more complex […]
Anti-money laundering laws to be improved, including registers of beneficial owners
The 2023 budget has allocated funds for action on Anti‐Money Laundering and Counter‐Terrorism Financing (AML) laws, including a beneficial ownership register to “record who ultimately owns, controls, and receives benefits from a company or legal vehicle operating in Australia”. There is some unfortunate background to this. The 2022 Bill As I reported earlier, the Anti-Money […]
World Bank’s B-Ready Report on country business systems, including on the efficiency of corporate insolvency systems
This explains the World Bank’s new Business Ready initiative, which will report on the business systems of up to 180 country economies including their insolvency systems. Some limitations on the methodology used by the World Bank are raised here. The World Bank Group has begun work to issue its new Business Ready (B-READY) report, which […]
Insolvency practitioner independence – how commercial is the fair-minded observer?
A pending WA appeal decision may address the issue of the extent to which commercial considerations surrounding the appointment of insolvency practitioners can be relevant in assessing their independence. A feature of the law concerning the independence of insolvency practitioners – IPs – is that it must be assessed in the context of the commercial […]
Personal insolvency statistics – March 2023 – beginnings of an increase?
The latest personal insolvency statistics released by AFSA for March 2023 show an increase in number over February but still well below past figures. New personal insolvency numbers increase in March 2023 | Australian Financial Security Authority (afsa.gov.au) During March 2023, there were 921 new personal insolvencies – rising from 796 in February – but […]
Insolvency law reform in Australia – three underlying concerns
With over 70 submissions from a wide variety of stakeholders and numerous answers to questions on notice, the parliamentary joint committee[1] inquiry into corporate insolvency has generated a high level of thought leadership and ongoing debate. We are ourselves pleased to see that a number of issues we have been raising have for the first […]
Personal insolvency numbers – an increase or a decrease?
While AFSA reports that personal insolvencies increased in number in February 2023, to 796, from 772 in January, this was hardly significant – in fact, more a decrease – given the usual low numbers over the December-January period. Monthly personal insolvency statistics | Australian Financial Security Authority (afsa.gov.au) In context, there were 1,614 personal insolvencies […]
Now we have three Part 5.3B restructuring practitioners
One more person has been appointed as a restructuring practitioner to conduct administrations under Part 5.3B of the Corporations Act bringing the total to three since this law first commenced in January 2021. See One small business restructuring practitioner – Murrays Legal Mr Ben Sewell is a Sydney lawyer and accountant whose practice focuses on […]
ASIC’s insolvency law enforcement role
The Senate Economics References Committee is loading up submissions received on its reference into ASIC’s capacity and capability to “undertake proportionate investigation and enforcement action arising from reports of alleged misconduct…”. Australian Securities and Investments Commission investigation and enforcement – Parliament of Australia (aph.gov.au) The Committee reports that it has received many submissions “due to […]
Attorney-General’s Roundtable on Personal Insolvency
A summary of priority issues discussed at the Attorney-General’s personal insolvency law reform roundtable held on 2 March 2023 has been released by the Attorney-General’s Department: Ministerial Roundtable on Personal Insolvency: summary There were five rather particular issues discussed with a range of other issues following. All were useful through none went to the fundamentals […]