Housekeeping - The Insolvency Law Reform Bill 2015

In tandem with the Government’s structural review of Australia’s insolvency laws are some housekeeping changes introduced into parliament in December.

Introduction

On 3 December 2015, the Federal Government introduced the Insolvency Law Reform Bill 2015 (Bill) into Parliament.

As noted in the second reading speech, the Bill implements the first phase of the Government's reform measures to "modernise and streamline" Australia's personal bankruptcy and corporate insolvency regimes. The focus of the Bill is on strengthening the regulatory framework governing the conduct and supervision of personal and corporate insolvency practitioners. It is intended to address a number of the perceived weaknesses in the current regulatory framework governing insolvency practitioners identified in the 2010 Senate Economics References Committee report (The regulation, registration and remuneration of insolvency practitioners in Australia: the case for a new framework).

The Bill

The reform measures contained in the Bill are intended to improve overall confidence in insolvency practitioners by increasing the competency and professionalism of practitioners, as well as allowing for better identification and the swift removal of practitioners who fail to adhere to the appropriate standard of conduct.

The Bill also seeks to align the registration and disciplinary frameworks that apply to registered liquidators and registered trustees to reduce legal complexity, risk and costs for all stakeholders. Consistent with the Government's commitment to reduce the cost of unnecessary or inefficient regulation imposed on businesses, it is estimated that the reform measures contained in the Bill will result in savings to the insolvency industry of $50 million per annum.

In addition, a number of measures have also been introduced with a view to promoting market competition between providers of insolvency services on price and quality of service.

Our thoughts

The reform measures contained in the Bill will not come as a surprise to many in the industry given the reform agenda in recent years.

They do in certain respects represent a significant first step towards modernising the current framework and removing unnecessary divergence between the personal and corporate insolvency regimes.

The Bill will have important consequences for all stakeholders and promises to strengthen the regulatory framework governing the supervision and discipline of insolvency practitioners. A strengthened and more efficient regulatory framework is intended to promote increased creditor, and more broadly, community confidence in insolvency practitioners and their procedures. Time will tell whether this objective is achieved.

Next steps

Further guidance in relation to the provisions contained in the Bill is to be provided in the form of insolvency practice rules. The Government has announced that a consultation process based on draft rules, which have yet to be released, will commence shortly.

The Bill is currently before the House of Representatives at the second reading speech stage.

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Jonathon Turner

I strive to deliver expert advice tailored to my clients' objectives, goals and commercial drivers. Excellence is a habit, not an act.

Jonathon Turner Senior Associate

Jonathon has extensive experience in banking, financial services and corporate insolvency litigation, fraud and commercial dispute resolution. He has acted for leading institutions, corporates and insolvency practitioners both domestically and internationally.

Jonathon is a banking, financial services and corporate insolvency litigation expert. He is dual-qualified having been admitted as a solicitor in England and Wales.

He advises a range of clients including leading financial institutions, insolvency practitioners and corporates on a wide variety of contentious and non-contentious matters. He has particular experience of advising on corporate insolvency litigation, commercial litigation, contractual disputes, fraud related matters, breach of director duty litigation, corporate restructuring, security enforcement and cross-border insolvency law.

Prior to joining HDY in December 2015, Jonathon practiced as an associate in the disputes resolution group at Linklaters LLP, London where he specialised in corporate insolvency, banking and financial services litigation. During his time in London he acted in a number of high profile and complex matters arising out of the global financial crisis in 2008. Jonathon has acted in matters before the UK Court of Appeal and UK Supreme Court.

He has produced a number of articles on insolvency, litigation and recovery matters.

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