“Shock horror – insolvent people don’t have many assets”
While we wait for the useful annual statistics from AFSA as to dividend returns in bankruptcies in 2022-2023,* an insolvency training body in the UK, NTI, has drawn attention to the minimal asset position of most bankruptcies and compulsory liquidations handled by the Official Receiver: Shock horror – insolvent people don’t have many assets UK […]
Australia has some of the longest lag times between employees being paid and taxes being remitted
This is a short historical background to the increasing non- or late payment of tax mainly by small businesses – owing over $33 billion of the $45 billion of collectable debt owed by all businesses – and how an opportunity to address this was, like most significant tax reform in Australia, rejected. The misuse by […]
Bankruptcy Act restructure – when statements of affairs are accepted
AFSA advises that the Bankruptcy Amendment (Discharge from Bankruptcy) Act 2023 (Cth), came into force on Thursday 23 November 2023. See Bankruptcy Act amendment | Australian Financial Security Authority (afsa.gov.au) Problems in the way statements of affairs have been “accepted” by the Official Receiver over many years will, it is said, be rectified by the Bankruptcy […]
Australia on a slide? [continued]
While I need to update my February 2022 comments below, and note for example that the government has now given commitment to the multilateral Open Government Partnership, and begun consulting Open Government Partnership Phase 2 – Attorney-General’s Department – Citizen Space (ag.gov.au), I add some more issues, from media sources only, to the list. As […]
Slow pace of litigation and incomprehensible laws
Former Federal Court judge Steven Rares is reported in the AFR[1] as having made several comments about the justice system in Australia, including about the slow pace of litigation and what he is reported as saying is “the “incomprehensible” laws that cover the corporate sector”. Slow prosecutions He refers to the Bankman-Fried trial in the […]
Defining bankruptcy
The Bankruptcy Amendment (Discharge from Bankruptcy) Bill 2023 has been introduced into parliament. It has presumably been drafted by the Office of Parliamentary Counsel (OPC). It would have been OPC that also drafted the Creative Australia Bill 2023 and described personal insolvency in clause 27 in these terms, that the Minister must terminate the appointment […]
Insolvent trading in context
Insolvent trading is one of the many items for review recommended by the Parliamentary Joint Committee report on Corporate Insolvency. ASIC is updating its guidance on the current law, including safe harbour, but larger issues, including international comparisons, need to be examined. ASIC has released Consultation Paper 372 – Guidance on insolvent trading safe harbour […]
The business structures of SMEs
A recent article in the Australian Business Law Review – Not in isolation: The Rationale for a Combination of Business Structures in Australia[1] – analyses the nature of combined business structures of small to medium enterprises (SMEs) in Australia, and the reasons given by advisers to their clients for adopting those combined structures. The focus […]
Bankruptcy by mistake – who pays?
What started out as a minor dispute over plumbing work for $2,880 descended into the plumber obtaining a judgment for $11,190 against the customer – Mr Warren – including over $7,700 in costs. A bankruptcy notice was issued leading to Warren’s bankruptcy before a registrar by way of a sequestration order. A review of a […]
“Related parties par excellence – company controlled by a wife on the one hand and the husband on the other”
When you are employed by your spouse’s company, and you attempt to resist bankruptcy based on your remuneration and support from that company, things can get difficult. Mr Herbert sought a review of a sequestration order made by a registrar on 31 May 2023 on the ground he was solvent. Justice Logan of the Federal […]
Rights to appeal – some limits?
In dealing with an unmeritorious bankruptcy law appeal, a Federal Court Judge has made a suggestion to limit appeal rights in order to avoid a “waste of judicial resources where 90 to 95% of the appeals have little if any merit”. In fact “the lower court is doing a fine job in its adjudication of […]
Annual reports 2022-2023: of ASIC – ‘a deliberate strategy of obfuscation so that the public is kept in the dark ….’? and of AFSA
ASIC’s ASIC Annual Report 2022–23 has been released amidst some recent severe criticism of the quality of its annual reports over the years, in relation to enforcement of director obligations, to the point of suggesting that the reports appear to adopt “a deliberate strategy of obfuscation so that the public is kept in the dark […]
Regulation of firms offering insolvency services
Further to my earlier post on insolvency practitioner (IP) regulation in the UK, and contrary to expectations,[1] the UK government has backed away from replacing the four recognised professional bodies (RPBs) with a single government regulator, for the moment. But it has announced plans to introduce new rules requiring the regulation of insolvency firms, other […]
‘Masculinity contest cultures’, and gender imbalance?
Evidence before the Parliamentary Joint Committee inquiry into Ethics and Professional Accountability [1] (PJC inquiry) may assist in considering the gender imbalance recommendation of the PJC’s July 2023 Report on Corporate Insolvency (PJC Report). A submission made to the PJC inquiry by SCOLA suggests that ‘masculinity contest cultures’ may be a reason for the concerns […]
Voluntary administrators removed as NZ interim liquidators of debtor on independence grounds
Following the appointment by the New Zealand High Court of Australian voluntary administrators of Probis as New Zealand interim liquidators of one of Probis’ creditors, Mars Cap, [see Australian voluntary administrators appointed as New Zealand interim liquidators – Murrays Legal] a director of Mars Cap has successfully had the interim liquidators replaced, because of concerns […]
Insolvent Trading and Minimal Returns to Creditors in Liquidations
This is a brief response to a well-researched and thoughtful article by Associate Professor Mark Wellard – Insolvent Trading: Director Accountability for Minimal Returns to Creditors in Liquidations (2023) 31 Insolv LJ 85. The article refers to comments that Jason Harris and I make about the need to attend to assetless insolvencies, including by way […]
Some insolvency law reform ideas from Scotland and New Zealand
“ … the state is, effectively, paying insolvency practitioners to end the life of small companies … a sub-optimal solution ….” “the standard liquidation process in NZ is simpler and more streamlined than the Australian simplified liquidation process. The new Australian procedure provides no useful model for NZ”. “the statutory regime under the [NZ] Companies […]
ACCC’s new penalty guidelines – some queries
The ACCC has issued new penalty guidelines – Guidelines on ACCC approach to penalties in competition and consumer law matters Three queries from my perspective One, while the guidelines say that there will be cases where a penalty may result in the contravenor becoming insolvent, but the penalty is no greater than is necessary to achieve […]
The cross-border regulation of insolvency practitioners – insights from INSOL Tokyo
I was invited to present at the INSOL International Academic Colloquium on 12 September 2023 in Tokyo on the panel concerning ‘Insolvency Professionals’, along with Dr E Streten (Aus) and Professor J Sugimoto (Japan) and chaired by Professor Charles Booth (USA). My session – the cross-border regulation of insolvency practitioners – generated several useful questions […]
Public interest supports time extension for insolvency recovery action
Litigation claims brought by insolvency practitioners (IPs) are not like the usual commercial claims on behalf of a commercial, or government, client. Despite marginal returns to creditors, there are public interest considerations that can apply, such as the need to enforce the insolvency laws, or even to allow recovery of remuneration. Nevertheless, there is a […]
Australian voluntary administrators appointed as New Zealand interim liquidators
In Insolvency licensing bodies confirmed for New Zealand’s new regulatory regime – Murrays Legal, of August 2020, I explained the new liquidator licensing regime in New Zealand. This requires insolvency practitioners operating in New Zealand to be licensed by an accredited body, being the New Zealand Institute of Chartered Accountants (NZICA). As an accredited body, NZICA […]
Cross-border regulation of insolvency practitioners – INSOL Tokyo – where are the government regulators?
This commentary has now been updated. See The cross-border regulation of insolvency practitioners – Murrays Legal ============================================== I was pleased to speak at the INSOL Academic Colloquium in Tokyo on 12 September 2023 on the extent and nature of regulation of insolvency practitioners when they are outside their home jurisdiction in a capacity as foreign […]
ASIC v Jones [GD Pork] – insolvency practitioner independence and pre-insolvency advice
A court decision concerning insolvency practitioner independence and pre-insolvency advice usefully raises issues recommended for law reform review by the Parliamentary Joint Committee Report on Corporate Insolvency. The WA Court of Appeal has dismissed an appeal by ASIC from a decision concerning the independence of practitioners, and their remuneration. ASIC had unsuccessfully claimed that the […]
Penalising cartel conduct – BlueScope Steel: $57m penalty, net profit $2.8b
The Federal Court has fined BlueScope Steel $57 million for cartel conduct under the Competition and Consumer Act 2010 (Cth) (CCA), after attempting to collude with other companies to adjust the price of steel products in Australia. BlueScope’s former general manager Jason Ellis was also personally fined $575,000 for his role in the scheme. The […]
