amendments to laws – ░░░ INSOLVENCY INTERFACE

Law change is significant win for insolvency practitioners

Corporate Insolvency, External administration, Insolvency Law, Insolvency practices, Law reform proposals, Practitioners Association (ARITA) Comments Off

May 082017

Before it is due to come into effect on 1 September 2017, section 60-20 of the Insolvency Practice Schedule (Corporations) (Australia) is to be amended.

Under the heading “Refining the Insolvency Law Reform Act 2016”, the Minister for Revenue and Financial Services has released draft legislation of amendments to the Corporations Act 2001 and Bankruptcy Act 1966.

The professional association representing insolvency practitioners has welcomed the amendments. The Australian Restructuring Insolvency & Turnaround Association (ARITA) says (on its website 5/5/2017):

The section would (have) require(d) external administrators and trustees to obtain consent from creditors prior to related entities obtaining any profit or advantage from any administration or estate – effectively requiring Insolvency Practitioners to seek creditor approval for their own firms to work on an appointment. We are delighted that Treasury have announced draft legislation specifically to resolve this issue. It is now clear that once remuneration is approved, further approval to share that remuneration with related parties (e.g. an Insolvency Practitioner’s firm or partners) is not required …. ARITA has been working very hard behind the scenes on this under strict confidentiality. The draft legislation is on The Treasury’s website for consultation. This is a significant win for the profession, achieved by ARITA.

Illustration of Change to Corporate Insolvency Law

I have set out below an illustration of the changes that are being made to section 60-20 of the Insolvency Practice Schedule (Corporations). Although “interested parties” have been invited to make a submission regarding the draft legislation by 17 May 2017, it is doubtful whether there will be any change to the draft. Continue reading »

Corporate insolvency laws: the shape of things to come

ASIC, Corporate Insolvency, Insolvency Law, Law reform proposals, Regulation, Standards Comments Off

Nov 282014

The exposure draft of Australia’s Insolvency Law Reform Bill 2014 has, in its 240 pages dealing with corporate insolvency, so many proposed changes in the form of amended, repealed, omitted, added and substituted words, items, definitions and sections, and so many additional parts, divisions, subdivisions, schedules and transitional provisions, that only an expert with tremendous devotion to the task would be able to understand what it all means and see what the new law governing corporate insolvencies is going to look like. The rest of us will probably have to wait until this Bill is passed and a compilation of the Corporations Act 2001 that takes into account all these changes is prepared.

Even then it appears we’ll see quite a mishmash of insolvency laws scattered throughout the Corporations Act and its Rules and Regulations. Perhaps our corporate insolvency laws need a real clean up, like gathering all existing provisions together and moving the lot (with amendments and additions) out of the Corporations Act and into a new, specific Act, such as a Corporate Insolvency Act. But that’s a discussion for another day.

However, one of the changes proposed by the Insolvency Law Reform Bill will take us a little in this direction. Several rules that are currently scattered throughout the Corporations Act will be encompassed in a new Division 4 – which is to be called the Insolvency Practice Schedule (Corporations). It will be added to Part 5.9 (Miscellaneous) of Chapter 5 (External Administration) of the Corporations Act 2001. The table below shows the layout of this new Division and points to the pages of the Bill’s Exposure Draft where the text of the laws is set out. I hope it’s of some help to those trying to understand the proposed changes.

Division 4—Insolvency Practice Schedule (Corporations)

Part	Division	Exposure Draft – pages
1-Introduction	1-Introduction	151 to 152
	5-Definitions	153 to 158
2-Registering and disciplining practitioners	10-Introduction	158 to 159
	15-Register of liquidators	159 to 160
	20-Registering liquidators	160 to 168
	25-Insurance	169
	30-Annual liquidator returns	170
	35-Notice requirements	171 to 172
	40-Disciplinary and other action	172 to 189
	45-Court oversight of registered liquidators	189 to 190
	50-Committees under this Part	190 to 195
3-General rules relating to external administrations	55-Introduction	195
	60-Remuneration and other benefits received by external administrators	196 to 208
	65-Funds handling	208 to 215
	70-Information	216 to 234
	75-Meetings	235 to 244
	80-Committees of inspection	244 to 256
	85-Directions by creditors	256 to 257
	90-Review of the external administration of a company	257 to 269
4-Other matters	95-Introduction	270
	100-Other matters	270 to 271
	105-The Insolvency Practice Rules *******	271 to 272. (Note: To be made by the Minister.)

*** The Bill’s Exposure Draft mentions the Insolvency Practice Rules many times, stating how and where they may be used to clarify, interpret, amplify, refine and flesh out the insolvency laws. A separate document – a 27 page Proposals Paper for Insolvency Practice Rules – has been released for comment (closing date 19/12/2014). The part of the Paper that applies to Corporate Insolvency is pages 16 to 27.

Note: There is an official Explanatory Material to the exposure draft of the Bill. It is 228 pages long, but only 115 pages concern changes to corporate insolvency laws!

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2014 version of Bill to amend corporate and personal insolvency laws

ASIC, Corporate Insolvency, Insolvency Law, Personal Bankruptcy, Regulation Comments Off

Nov 172014

On 7 November 2014 an exposure draft of the Insolvency Law Reform Bill 2014 (ILRB 2014) was released by the Australian Treasury for comment.

The Treasury Crest

Summaries:

The Treasury’s summary/promotion of the legislation is as follows:

“The draft Bill comprises a package of proposals to amend and streamline the Bankruptcy Act 1966 and the Corporations Act 2001. The proposed amendments will:

•remove unnecessary costs and increase efficiency in insolvency administrations;
•enhance communication and transparency between stakeholders;
•promote market competition on price and quality;
•boost confidence in the professionalism and competence of insolvency practitioners; and
•remove unnecessary costs from the insolvency industry resulting in around $55.4 million per annum in compliance cost savings.”

The Explanatory Material issued with the Bill opens with this outline:

“The Insolvency Law Reform Bill 2014 (Bill) amends the Corporations Act 2001 (Corporations Act), the Australian Securities and Investments Commission Act 2001 (ASIC Act) and the Bankruptcy Act 1966 (Bankruptcy Act) to create common rules that would:
• remove unnecessary costs and increase efficiency in insolvency administrations;
• align and modernise the registration and disciplinary frameworks that apply to registered liquidators and registered trustees;
• align and modernise a range of specific rules relating to the handling of personal bankruptcies and corporate external administrations;
• enhance communication and transparency between stakeholders;
• promote market competition on price and quality;
• improve the powers available to the corporate regulator to regulate the corporate insolvency market and the ability for both regulators to communicate in relation to insolvency practitioners operating in both the personal and corporate insolvency markets; and
• improve overall confidence in the professionalism and competence of insolvency practitioners.”

Links to government material:

The draft Bill (ILRB 2014) in PDF format

The Explanatory Material in PDF format

The Insolvency Practice Rules – Proposals Paper in PDF format

Coversheet for a submission by post

The Treasury website page

Previous Bill and background material:

The first version of ILRB 2014 appeared on 19/12/2012 as Insolvency Law Reform Bill 2012, but it never became law. However, the 2012 Explanatory Memorandum and the 2012 Exposure Draft contains valuable background information related to the current Bill. (Sixteen submissions were made for this 2012 consultation.)

Further background information regarding ILRB 2014 is available in the June 2011 Treasury Options Paper titled “A Modernisation and Harmonisation of the Regulatory Framework Applying to Insolvency Practitioners in Australia”. (Thirty three submissions were made for this consultation.)

The 2011 options paper was followed in December 2011 by a Proposals Paper with the same title. (Twenty nine submissions were made for this consultation.)

Submissions regarding ILRB 2014:

Closing date for submissions: Friday, 19 December 2014.

Email submissions are to be done online at:

http://www.treasury.gov.au/ConsultationsandReviews/Consultations/Submission-Form?parent={34029467-07BE-46D9-AA9E-86DAC3715DFF}

Address for written submissions:

Manager
Corporations and Scheme Unit
Financial System and Services Division
The Treasury
Langton Crescent
PARKES ACT 2600

For enquiries call Peter Levy at The Treasury on (02) 6263 3976.

Further posts on this site:

Further posts will be made on this blog site in the coming days with details of some of the proposed changes to corporate insolvency laws.