The last substantive reforms to Australia’s insolvency system arose out of the Harmer inquiry, which was conducted in the 1980s. Since then, the corporate world has become a lot more complicated, and financial transactions much more complex. Calls for fresh reform to Australia’s insolvency system have been steadily growing.
In December 2015, the Federal Government issued its Innovation Statement which included proposals for insolvency law reform. Specifically, the Government is proposing to introduce a ban on enforcement of ipso facto clauses if the company is undertaking a restructure, to offer a safe harbour for directors if they appoint a restructuring adviser to develop a turnaround plan, and to provide a reduction in the current default bankruptcy period from 3 years to just 1 year. These changes are to be welcomed in principle but, as they say, the devil will be in the detail.
In a feature interview with Innovation Minister, the Hon Christopher Pyne MP, shared his views on the Government's innovation agenda with particular reference to the proposed insolvency reforms.
We have set out in this publication a number of articles that look at the proposed ipso facto and safe harbour reforms, as well as the Productivity Commission’s report in order to place these proposed reforms in their proper context. We also provide a global perspective on insolvency law reform by looking in particular at the reform agenda in Europe and the United States. This publication concludes with a short review of the Law Reform Bill 2015 introduced into Federal Parliament shortly before Christmas, which proposes some legislative changes to other aspects of insolvency law and regulation in Australia.
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