Sep 202017
 

Ship entering harbour

 

From 18 September 2017 company directors will be able to seek shelter from liability for insolvent trading.

Previously, a director who caused a company to incur new debts (e.g., obtain goods and services on credit) at a time when the company was unable to pay its existing debts/liabilities, could – if the company was subsequently placed in liquidation –  be sued by the liquidator or by the creditor provider.

Now, the laws will “protect a director in relation to debts that a company incurs directly or indirectly  in connection with developing and taking a course of action that is reasonably likely to lead to a better outcome for the company than proceeding immediately to voluntary administration or winding up.” [Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017, Explanatory Memorandum, paragraph 1.32]

For the full history of this legislation – which encompasses “Safe Harbour for Insolvent Trading” clauses and “ipso facto” clauses – and to see a discussion of the key issues (35 pages in all), click on this link: Parliamentary Library’s Bills Digest No. 33 of 11 September 2017.

TO BE CONTINUED …

Sep 132017
 

Phoenix

Media release, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, 12 September 2017:

The Turnbull Government is taking action to crack down on illegal phoenixing activity that costs the economy up to $3.2 billion per year to ensure those involved face tougher penalties, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, announced today.

Phoenixing – the stripping and transfer of assets from one company to another by individuals or entities to avoid paying liabilities – has been a problem for successive governments over many decades. It hurts all Australians, including employees, creditors, competing businesses and taxpayers.

The Government’s comprehensive package of reforms will include the introduction of a Director Identification Number (DIN) and a range of other measures to both deter and penalise phoenix activity.

The DIN will identify directors with a unique number, but it will be much more than just a number. The DIN will interface with other government agencies and databases to allow regulators to map the relationships between individuals and entities and individuals and other people.

In addition to the DIN, the Government will consult on implementing a range of other measures to deter and disrupt the core behaviours of phoenix operators, including non-directors such as facilitators and advisers. These include: Continue reading »

Sep 112017
 

Logo with border

With the commencement on 1 September 2017 of the delayed parts of the Insolvency Law Reform Act 2016 (the ILRA), the Australian Securities and Investments Commission (ASIC) has updated some of the Information Sheets which it makes available on its website to the general public.

ASIC says  that “Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.”

Over time ASIC has issued about 36 insolvency information sheets and flow charts (click here for my list).  Below is a list of 15 which have recently been reissued.

In the past, nearly all ASIC’s information sheets have been available to download as printable sheets in PDF file format.  However, this facility has not (yet) been provided with the updated/reissued sheets, which are only available as text on ASIC web pages. The links below are to the relevant website pages.

ASIC INSOLVENCY INFORMATION SHEETS – REISSUED 1 SEPTEMBER 2017
Form Number
Title of Sheet
Date Updated
Link to ASIC site
INFO 39 Insolvency information for directors, employees, creditors and shareholders

1/9/2017

INFO 39
INFO 41 Insolvency: A glossary of terms 1/9/2017 INFO 41
INFO 42 Insolvency: a guide for directors 1/9/2017 INFO 42
INFO 43 Insolvency: a guide for shareholders 1/9/2017 INFO 43
INFO 45 Liquidation: a guide for creditors 1/9/2017 INFO 45
INFO 46 Liquidation: a guide for employees 1/9/2017 INFO 46
INFO 53 Providing assistance to external administrators – Books, records and RATA 1/9/2017 INFO 53
INFO 54 Receivership: a guide for creditors 1/9/2017 INFO 54
INFO 55 Receivership: a guide for employees 1/9/2017 INFO 55
INFO 74 Voluntary administration: a guide for creditors 1/9/2017 INFO 74
INFO 75 Voluntary administration: a guide for employees 1/9/2017 INFO 75
INFO 84 Independence of external administrators: a guide for creditors 1/9/2017 INFO 84
INFO 85 Approving fees: a guide for creditors 1/9/2017 INFO 85
INFO 152 Public comment on ASIC’s regulatory activities 1/9/2017 INFO 152
INFO 212 Illegal phoenix activity 1/9/2017 INFO 212
Sep 052017
 

ARITA logo

With the commencement on 1 September 2017 of the delayed parts of the Insolvency Law Reform Act 2016 (the ILRA), the Australian Restructuring Insolvency & Turnaround Association (ARITA) has updated the Insolvency Explained section of its website which provides information to stakeholders in the insolvency process, and has developed a range of information sheets designed to assist creditors with understanding insolvency processes.

This is a guide to ARITA’s information, with links to the relevant website pages.

1. Insolvency explained   CLICK HERE

  • What is insolvency?  CLICK HERE

    • Overview of insolvency – corporate
  • What is bankruptcy?  CLICK HERE

    • Overview of insolvency – personal
  • How does insolvency work?  CLICK HERE

  • Insolvency and creditors   CLICK HERE

  • Insolvency and employees   CLICK HERE

  • Insolvency and shareholders   CLICK HERE

  • Insolvency and company directors   CLICK HERE

  • Insolvency information sheets   see section 2 below

  • Glossary of terms   CLICK HERE

2. ARITA insolvency information sheets

The ARITA insolvency information sheets listed below may be downloaded from the page headed “Insolvency information sheets”. They are all in PDF format. ….. CLICK HERE

 Company insolvency

  • Creditor rights (liquidation)
  • Creditors rights (voluntary administration)
  • Remuneration of an external administrator
  • Proposals without meetings
  • Committees of Inspection
  • Offences and recoverable transactions in a voluntary administration

Personal insolvency (including bankruptcy)

  • Creditor rights
  • Proposals without meetings
  • Committees of Inspection.

 


A short history of the ILRA

The ILRA reform provisions relating to the rules and conduct of external administrations, commenced on 1 September 2017.  This followed ILRA reform provisions relating to the registration and discipline of registered liquidators, and provisions relating to matters such as notification of contravention of a Deed of Company Arrangement and lodgement of a declaration of relevant relationships and declaration of indemnities in a voluntary administration, which commenced on 1 March 2017.

Parliament passed the Insolvency Law Reform Act 2016 (the ILRA) on 22 February 2016. The government registered the related Insolvency Practice Rules (Corporations) 2016 (the Rules) in December 2016. The ILRA and Rules change the law relating to the registration and discipline of liquidators and the conduct of external administrations.