Australia’s safe harbour protection from insolvent trading liability, continued

The report on Australia’s safe harbour protection for directors (s 588GA) from what is said to be our strict insolvent trading laws (s 588G) will no doubt please those in the industry for its rigorous legal analysis and precise recommendations, and the preservation of the safe harbour law upon which many a practitioner’s business model […]

What does our insolvency system produce?

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 gather and publish […]

Why do we have preference recoveries in insolvency? – updated

The High Court of Australia (Keane and Gleeson JJ) has granted the liquidators special leave to appeal from the Full Federal Court decision abolishing the peak indebtedness rule. “KEANE J: Mr Evans [for the liquidators], I think so far as the importance of the question is concerned, you are probably pushing against an open door […]

Insolvency returns to creditors and other fictions – reissued March 2022

Insolvencies average dividend returns to unsecured creditors of under 5 cents in the dollar, in some cases, under 1 cent.  For your unpaid debt of $10,000, you may receive $100, some months or years later. Much of insolvency is based on fiction.    I’d like to think that those in my field are familiar with […]

ASIC’s power to wind up abandoned companies – a drop in the ocean?

ASIC has revised its guidance on the exercise of its powers to order the winding up of an abandoned company, noting that “directors sometimes abandon their companies without paying employee entitlements”: RG 242 ASIC’s power to wind up abandoned companies | ASIC – Australian Securities and Investments Commission ASIC wound up 19 such companies in […]

Diversity and inclusion in insolvency

Diversity in the qualifications, experience, knowledge and abilities of those in the insolvency industry is the subject of this article, leaving other aspects of diversity in that sector to those more qualified. With ARITA anticipating International Women’s Day in promoting its own Diversity and Inclusion program,[1] I was prompted to see my own comments on […]

A recusal application dismissed; ALRC report on Judicial Impartiality awaited

Justice Steven Rares of the Federal Court of Australia has rejected an application to recuse himself from hearing a matter based upon claimed grounds that he had so conducted himself in a hearing involving the applicant and others in 2014 that a fair-minded lay observer reasonably might apprehend that he might not bring an impartial […]

Small business insolvency advice via the Ombudsman

The federal government’s current focus on personal insolvency law reform coincides with Small Business Month in NSW and the Small Business and Family Enterprise Ombudsman’s pending and timely report on business resilience in the face of natural disasters.  See ASBFEO Newsletter March – OMBUDSMAN’S INQUIRY NAVIGATES ROAD TO RESILIENCE (mailchi.mp) In the context of natural […]

Australia on a slide?

I recently drew attention to a Bill – the Anti-Money Laundering and Counter-Terrorism Financing Amendment (Increased Financial Transparency) Bill 2022 – introduced into the Australian parliament on 8 February 2022 requiring the government to introduce a Bill into the Australian parliament by Friday 30 September 2022.  See Australia’s response to money laundering and terrorist financing […]

“Voluntarily becoming bankrupt” – the new bankruptcy process

A person goes voluntarily bankrupt in Australia by completing an online “Bankruptcy Form” with the Official Receiver. What is now more a loosely worded opaque techno process has been criticised by a Judge as containing a “presumptuous statement, “I am voluntarily becoming bankrupt” and a presumptuous question, “What do you believe is / are the […]

Company owners and sole traders

In the government’s proposed 5 year review of the Insolvency Law Reform Act 2016 changes, one particular issue needing attention is indirectly prompted by the government’s recently proposed bankruptcy reforms. That issue concerns non-compliant directors of insolvent corporate businesses, and the obvious disparity in their treatment with that imposed on non-compliant bankrupts.  That disparity is […]

Australia’s response to money laundering and terrorist financing – a Bill for a Bill

The Australian parliament’s response to a 2016 recommendation to introduce law to counter money laundering and terrorist financing – by way of a Bill introduced into parliament in February 2022 requiring the government to introduce a Bill into parliament by 30 September 2022 – has received a major set-back.  The Senate Selection of Bills Committee […]

Proof of service of a bankruptcy notice – why it is, or why is it, so important?

A woman made bankrupt by a federal court registrar exercising judicial authority of the court has had her bankruptcy set aside because she was not properly served with the bankruptcy notice.  The creditor was her former husband and the sequestration order was made on 25 November 2021. The facts The lawyers for the creditor had […]

Proof of service of a bankruptcy notice – why it is, or why is it, so important?

A woman made bankrupt by a federal court registrar exercising judicial authority of the court has had her bankruptcy set aside because she was not properly served with the bankruptcy notice.  The creditor was her former husband and the sequestration order was made on 25 November 2021. The facts The lawyers for the creditor had […]

Deregistered/dissolved companies – let them be?

The UK Insolvency Service has been granted new investigative and disqualification powers to regulate directors who ‘dissolve’ (in Australian terms, ‘deregister’) their companies to avoid paying their liabilities. This is under the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021. If misconduct is found, directors can face serious sanctions, including court orders for compensation.[1] […]

Deregistered / dissolved companies – let them be?

The UK Insolvency Service has been granted new investigative and disqualification powers to regulate directors who ‘dissolve’ (in Australian terms, ‘deregister’) their companies to avoid paying their liabilities. This is under the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021. If misconduct is found, directors can face serious sanctions, including court orders for compensation.[1] […]

Insolvent insolvency practitioners?

An Australian insolvency industry body – ARITA – has suggested that the law should be changed to allow insolvency practitioners (IPs) who themselves become insolvent, or their company, to nevertheless be permitted to remain registered to practice: Members facing financial distress, December 2021, version 1.0.  This is in the context of advice given by ARITA […]

Is it relevant outside Canberra whether a law is within or without Treasury’s portfolio?

Silos

With the government’s Treasury department busily introducing changes to the law to allow virtual meeting technology (VMT) for corporate liquidations, and liquidator job interviews, the latest being about polls and voting, it does not seem to be ensuring the same changes are made in personal bankruptcy law, although it is reverting to the “show of […]

Australian bankruptcy statistics 2019-2021

Numbers of Australia’s 3 year long bankruptcies were down 46.7% in 2020-2021, producing an average dividend of only 1.63c/$.  The private profession, which handles about 20% of bankruptcies, paid out 2.37c/$.  Their total remuneration of $69m came from total receipts of $274m.  These figures come from AFSA’s annual administration statistics for the 2020-2021 and also […]

Australian MSME insolvency law reform

Australian lawyers are presently represented at an international gathering of experts to address the need for particular insolvency laws for small business in the wake of COVID-19, given the unique issues of financial distress involved in that sector:  Working Group V: Insolvency Law | United Nations Commission On International Trade Law 13-17 December 2021. On […]