Punishment for bankruptcy – wearing a yellow and brown bonnet in the public square
A recent book, Re-examining insolvency law and theory – perspectives for the 21st century, comprises chapters on a wide range of theoretical perspectives on insolvency law – from those of morality, liberalism, tax law, human rights, competing goals and creditor rights, property rights, feminism, and the psychology of law reform. In one chapter – A […]
Personal insolvency figures – December 2023
Numbers of personal insolvencies in Australia continue to fall with the December 2023 figure down to 805 compared with 853 in November 2023. However, December does generally tend to have lower figures. These insolvencies were in the broadly usual proportions of 63% (509) bankruptcies, 36% (289) debt agreements, and 1% (7) personal insolvency agreements. A […]
New corporate definitions of director, officer and asset
Following the ALRC’s work on Ch 7 of the Corporations Act, attention has already been given to legislative changes tidying up the Act across a range of sections. There are consequential changes made in other laws, but not those that fall outside the Treasury portfolio. See the Treasury Laws Amendment (2023 Law Improvement Package No. […]
Corporations Act redrafting – ch 5?
Some years ago, I suggested to a Treasury officer that Ch 5 of the Corporations Act be redrafted and simplified. The curt response was, “you think Ch 5’s difficult – check out Ch 7”. That was no doubt correct. Chapter 7 is the subject of the ALRC’s Confronting Complexity: Reforming Corporations and Financial Services Legislation – […]
The new Administrative Review Tribunal and law for the relief of insolvent debtors
On 7 December 2023, the government introduced legislation that would abolish the Administrative Appeals Tribunal (AAT) and establish what it terms “a new, fit-for purpose administrative review body, to be named the Administrative Review Tribunal (the ART)”. Parliamentary committees are inquiring into the relevant Bills with the safeguards against political appointees to the ART coming […]
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 […]
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 […]