By Justin Marcheske, Tucker & Cowen, Solicitors, Brisbane.
The Insolvency Law Reform Act 2016 (Cth) made changes to the personal and corporate insolvency regime in Australia. It is important for practitioners and clients to know what these changes.
The Insolvency Law Reform Act 2016 (“the Act”)
The second reading speech says the Act aims to align and strengthen corporate and personal insolvency regimes. The catalyst for the change is largely the Productivity Commission’s report into the insolvency regime which concluded that the insolvency industry needed to be improved. The changes seem to be intended to drive practitioners and processes to be more cost effective.
The Act makes numerous amendments to the Bankruptcy Act 1966 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth) and the Corporations Act 2001 (Cth).
Certain procedural aspects like registration and enforcement took effect from 1 March 2017. The bulk of the changes came into effect on 1 September 2017.
Key the changes to the corporate insolvency regime include:
- a statutory default remuneration figure of $5,000 available to liquidators which does not require ratification at a creditor’s meeting;
- ability of creditors to change liquidators by majority resolution instead of having to apply to the Court;
increased regulation of liquidators.
Key changes to the personal insolvency regime include:
- introduction of a new suite of terminology whereby a bankrupt is now referred to as a “regulated debtor”;
a possibility of the bankruptcy period being reduced from 3 years to 1 year.
- Key takeaways include:The changes encourage cost effective practices.
Some changes (particularly those relating to practitioner regulation) were effective from 1 March 2017, with the bulk of the changes effective on1 September 2017.
Anybody affected by corporate or personal insolvency should obtain legal advice to see if there are any changes affecting their situation.