A winding up vs an administration – s 440A(2)
The situation where a creditor applies for a winding up of a company under the Corporations Act, and while that is pending, the directors appoint an administrator under Part 5.3A, has led to some odd law, under s 440A(2) of the Act. Broadly, the one petitioning creditor’s intent to wind up the company will often […]
Insolvency statistics 2023
Each of our insolvency regulators, ASIC for corporate, AFSA for personal, has issued its statistics for 2022-2023 right on the eve of Christmas,[1] each presenting its [2] separate perspectives, with few connections offered, for example in relation to small business insolvencies. [originally issued 24.12.23; updated 30.12.23]. Personal insolvency Some brief* points are: There were just […]
Law reform – small business redundancy exemption removed
Among the many changes introduced by the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 are those in Schedule 1 Part 2 that address the “anomalous consequences of the small business redundancy exemption in insolvency contexts by providing an exception to its operation when a larger business downsizes to become a smaller business employer due […]
The AFCA financial complaints scheme and bankruptcy – no appeal
Further to my case comment below, AFSA has, belatedly, advised that it is not appealing this decision of Justice Rares of 11 October 2023. Nevertheless, it is “carefully considering the implications of the judgment [for] the Official Trustee’s management of estates”, that a compensation claim taken through the Australian Financial Complaints Authority (AFCA) by a […]
NOCLAR – accountants’ reporting of offences
Some while ago, I took an interest in the professional obligation that accountants decided to impose on themselves to respond to and as necessary refer observed legal misconduct – NOCLAR “non-compliance with laws and regulations” – to the police or other authorities. This obligation commenced through changes made to the accountant’s ethics code, APES 110. […]
Bankruptcy statistics – more of the same
With the annual personal insolvency statistics for 2022-2023 not yet released, AFSA has released figures for October 2023, showing 951 new personal insolvencies, falling marginally from 978 in September. Of these, 543 were bankruptcies, 392 were debt agreements, 15 were personal insolvency agreements, and 1 was an insolvent deceased estate. Where AFSA could identify the […]
NZ insolvency practitioner sanctioned
A sanction of a New Zealand liquidator for the poor handling of his matters provides an illustration of New Zealand’s relatively new licensing and co-regulation regime for insolvency practitioners, which contrasts with direct government regulation in Australia. The NZ regime is one of co-regulation, through NZICA, CAANZ, RITANZ and the Registrar of Companies, under the […]
Language please….!
“Finally on the subject of language, the Commission staff are not to be blamed for the archaic forms of syntax “a number of people was” and use of the subjunctive “if he were” throughout the report. That is my doing; my staff did their best to correct what they were convinced were errors, only to […]
Personal insolvency numbers – July-Sept 2023
With the annual personal insolvency statistics for 2022-2023 not due until December 2023, AFSA has released a quarterly report for the July-September quarter 2023, showing an increase over the July-September quarter of 2022. That is, there were 3,108 new personal insolvencies in the 3-month period to September 2023 – up from 2,410 in September 2022. […]
“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 […]
