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