Oct 122018

On 1 October 2018 the Australian Securities and Investments Commission (ASIC) released a draft of a new Report as to Affairs (commonly known as a RATA). A copy of this form, which includes detailed instructions, may be downloaded from my website or from this ASIC journal.

The new name of the report is to be Report On Company Activities and Property (ROCAP). ASIC intends releasing it in November 2018.


Form apges

The following comments outline my preliminary analysis of the draft. Continue reading »

Mar 052015

A set of “policy positions” on insolvency law and practice has just been issued by Australia’s insolvency practitioners association – the Australian Restructuring Insolvency and Turnaround Association (ARITA).

The policies are titled:

  • Policy 15-01: ARITA Law Reform Objectives (Corporate)
  • Policy 15-02: Aims of insolvency law
  • Policy 15-03: Current Australian corporate restructuring, insolvency and turnaround regime and the need for change
  • Policy 15-04: Creation of a Restructuring Moratorium (Safe Harbour)
  • Policy 15-05: Stronger regulation of directors and creation of a director identification number
  • Policy 15-06: Advocate for Informal Restructuring
  • Policy 15-07: Reworked Schemes/Voluntary Administration regimes to aid in the rehabilitation of large enterprises in financial distress
  • Policy 15-08: Extension of moratorium to ipso facto clauses
  • Policy 15-09: Streamlined Liquidation for Micro Companies
  • Policy 15-10: Micro Restructuring
  • Policy 15-11: Pre-positioned sales

ARITA’s 17-page paper – named Policy Positions of the Australian Restructuring Insolvency and Turnaround Association – is the final version of its discussion paper, A Platform for Recovery 2014.  It is attached to its submission on 2 March 2015 to the Productivity Commission’s public inquiry into ” barriers to setting up, transferring and closing a business”.

It seems ARITA’s policy positions paper is not yet (mid-day 5/3/15) published as a separate document on ARITA’s website.  However, I have created a copy, which is available on my website now.

ARITA’S full 59-page submission to the Productivity Commission is available on its site, as is its useful summary of the key points made in the submission. ARITA says that the policies in the Policy Positions paper form the key basis of ARITA’s submission to the Productivity Commission.


Other link: To the website of the Productivity Commission’s  Business Set-up, Transfer and Closure inquiry.

Dec 102014

In time for the Christmas holidays the American Bankruptcy Institute (ABI) has released (8 December 2014) a 400-page report titled Commission to Study the Reform of Chapter 11, 2012-2014, Final Report and Recommendations.

The ABI [**] is a bit like the Australian Reconstructing Insolvency & Turnaround Association (ARITA), only much larger. On its website it’s described as follows:

“The American Bankruptcy Institute is the largest multi-disciplinary, non-partisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI Canal Center Plaza membership includes more than 13,000 attorneys, auctioneers, bankers, judges, lenders, professors, turnaround specialists, accountants and other bankruptcy professionals providing a forum for the exchange of ideas and information. In fulfillment of its mission to provide information to its members, journalists, Congress and the public, ABI is engaged in numerous educational and research activities, as well as the production of a number of publications both for the insolvency practitioner and the public.”

This is an extract from the Introduction to the ABI’s report:

“A robust, effective, and efficient bankruptcy system rebuilds companies, preserves jobs, and facilitates economic growth with dynamic financial markets and lower costs of capital. For more than 35 years, the U.S. Bankruptcy Code has served these purposes, and its innovative debtor in possession chapter 11 process, which allows a company to manage and direct its reorganization efforts, is emulated around the globe. As with any law or regulation, however, periodic review of U.S. bankruptcy laws is necessary to ensure their continued efficacy and relevance …. Markets and financial products, as well as industry itself, often evolve far more quickly than the regulations intended to govern them. It may be that significant economic crises tend to occur cyclically and encourage reevaluation of the federal bankruptcy laws. Regardless, the general consensus among restructuring professionals is that the time has come once again to evaluate U.S. business reorganization laws.”

Despite the ABI’s report being mainly about Chapter 11 – i.e., the US law which permits a corporation or other entity to propose a plan of reorganization (debtor in possession) to keep its business alive and pay creditors over time – it seems to me that Australian insolvency law enthusiasts will find its discussion and analysis invaluable. Seriously.

A pdf copy of may be downloaded from the ABI site.

[**] As we all know, in America the term “bankruptcy” refers to corporate insolvency as well as personal insolvency.

Corporate insolvency laws: the shape of things to come

 ASIC, Corporate Insolvency, Insolvency Law, Law reform proposals, Regulation, Standards  Comments Off on Corporate insolvency laws: the shape of things to come
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)



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!

________________________ END OF POST ____________________________

Oct 222014

” Working at the coal face of insolvency and restructuring, our members have a unique view of the effectiveness of our legislative framework in restoring the economic value of underperforming businesses. For the optimum operation of markets, it’s vital that their expertise is utilised to ensure our legislative framework is the best that it can be.”

This statement from the Australian Restructuring Insolvency and Turnaround Association (ARITA) – the professional body to which most insolvency practitioners belong – accompanies publication (14-10-2014) of its discussion paper on dealing with corporate financial distress in Australia.

ARITA says that its discussion paper – “A Platform for Recovery” – identifies seven current issues in the insolvency regime and proposes law and practice reforms to remedy them.  The paper’s Executive Summary is as follows:

ARITA executive summary

The following are further statements made by ARITA on the launch its plans:

“As Australia’s insolvency and recovery professional body, we must have a clear and well-articulated policy position across the full gambit of issues that we cover, that all key stakeholders are aware of.  Our new discussion paper … identifies seven current issues in the insolvency regime and proposes law and practice reforms to remedy them.  The discussion paper does not go into the detail of specific legislative change, but concentrates on concepts and their merits …. The goal of the discussion paper is to stimulate active and informed discussion of the issues that are raised. This will inform ARITA’s final policy position …. A foundation of our thinking is that the current “one size fits all” approach to dealing with companies in financial distress is flawed.”

A copy of  A Platform for Recovery may be viewed and obtained at this location on the ARITA website.

ARITA is inviting contributions to the debate. To go to their discussion forum, go to ….   www.arita-forums.com.au

Is insolvency administration becoming a mere commodity?

 ASIC, Corporate Insolvency, Ethics, Insolvency practices, Regulation, Standards  Comments Off on Is insolvency administration becoming a mere commodity?
Apr 082014

Liquidators have been classified by our corporate regulator as “gatekeepers” in the financial services industry, to the extent that ASIC says it  is “looking to key gatekeepers, such as directors and insolvency practitioners, to ensure that they make appropriate decisions and uphold their obligations regarding insolvent entities”.  (1)

As admirable as this concept is – and it’s been decreed as a proper one in many court judgments – I wonder how it sits with the growing marketing and commodification of insolvency administration for a “fixed price” or a “guaranteed low cost”:

Commodification 2

Commodification 8

Commodification 3

Commodification 5

Commodification 6

Commodification 1

Commodification 7

Commodification 9

Commodification 11

Commodification 10

Commodification 12

Commodification 13

NOTE (1) See for example,  ASIC Report 360, ASIC enforcement outcomes: January to June 2013  (July 2013).


Jan 142014

On the Insolvency Interface blog site menu

I have created a directory facility for insolvency practitioners, lawyers and other consultants that provide specialist insolvency and recovery services (corporate and personal) to list their names and contact details.  This facility is available free of charge and obligation free until 30 June 2014.

Just click on the menu item “Insolvency & Recovery Services Directory” (above).

Then on “Submit a Listing”, and follow the prompts.  You will be asked to enter your category of service, business name, location, phone number, and a description of your services.  You can also supply certain other information if you like, such as your web site address.

Visitors will be able search the directory by business name, category of service, location, etc.

Peter Keenan 14/1/2014

All about the Report As To Affairs in corporate insolvency

 ASIC, Corporate Insolvency, Insolvency Law, Insolvency practices, Regulation  Comments Off on All about the Report As To Affairs in corporate insolvency
Jul 112012

The corporate regulator may not care much about it but liquidators do, and they want some changes made.

The Report as to Affairs (RATA) is a form which is prepared for the purpose of showing the financial  position of a company at commencement of its entry into liquidation, controllership or  administration.

Between November 2011 and March 2012, and with support from a scholarship administered by the Insolvency Practitioners Association of Australia (IPA),  I carried out extensive research into the RATA, including a random survey of 105 official liquidators.

My research paper is now available from the IPA or from the Centre for Corporate Law and Securities Regulation.

Titled “An Appraisal of the Report as to Affairs”, the paper is a report on the written survey of official liquidators concerning the Report as to Affairs form and associated compliance issues.  The report also examines the history and purpose of the Report as to Affairs, laws which impose duties to submit the form, and ideas for change.

The paper concludes with several recommendations and observations, including the following:

“This survey of liquidators has brought to light substantial criticisms and concerns  about the RATA and a desire for change.  It coincides with moves towards  harmonisation of personal and corporate insolvency regulation, and with the start of  the Personal Property Securities Act, which makes significant changes to priority  rules for secured parties as well as introducing a new vocabulary.  All this suggests  that it’s time the RATA form was revisited and overhauled.    The ASIC should make the RATA the subject of an inquiry through a Consultative  Paper …. The ultimate aims of the consultation would be to produce a new or redesigned form, a  Regulatory Guide to the form, and an information sheet for directors.  The inquiry  should consider, for example, what constitutes an acceptable standard for a RATA –  i.e., when does a professed RATA qualify as a valid RATA – and how the receipt of a  RATA that fails to meet that standard should be handled.”

Appended to the main research report is a supplement which reproduces verbatim all the ideas, suggestions and comments made by liquidators concerning what is wrong with the present RATA and how it could be improved.

Thanks to Professor Ian Ramsay, of Melbourne University, who is Director of the Centre for Corporate Law and Securities Regulation, the full research paper appears in SAI Global Corporate Law Bulletin No. 178.  A copy of the paper (including the annexures) is available as one pdf file from http://cclsr.law.unimelb.edu.au/files/The_RATA_-_research_paper_-_Keenan_-_2012_-_IPA_TTS.pdf

A shortened version of the paper appears in the latest edition of the Australian Insolvency Journal , which is published by the IPA (see Volume 24 Number 2, pages 10 to 23).  The link to that version is  http://www.ipaa.com.au/default.asp?menuid=319&artid=1157

I am indebted to Michael Murray, Legal Director of the IPA, who vetted the research paper and edited the version that appears in the Australian Insolvency Journal.  It was as a result of his enthusiasm and status in insolvency law circles that Professor Ian Ramsay took an interest in the paper and had it published by the Centre for Corporate Law and Securities Regulation. Michael has also forwarded the paper to the ASIC, ITSA and relevant government departments.

Oct 142011

The Government has examined the case for making one regulator responsible for both personal insolvency laws and corporate insolvency laws and decided to retain the status quo. 

Hence, it will be business as usual for the Insolvency Trustee Service Australia (personal insolvency) and the Australian Securities and Investments Commission (corporate insolvency).

The Australian Productivity Commission (APC) recommended in its report on the Annual Review of Regulatory Burdens on Business: Business and Consumer Services (the Report) that the Government consider the option of having a single regulator of what are, in many respects, similar laws

In response to this recommendation (part of number 4.3), the Government says:

“The Government is not proposing to establish a new single regulator of personal and corporate insolvency regimes. There would be major upfront costs of merging the regulators, which may not necessarily be offset by long-term savings.  The extent to which simply unifying the regulators would result in an improved regulatory environment is not clear.  Separate policy considerations apply to many aspects of personal and corporate insolvencies and there is not currently sufficient evidence that a one-size-fits-all approach for all issues would necessarily optimise outcomes for stakeholders.  The removal of the responsibility for regulation of corporate insolvency from the corporate regulator would result in corporate insolvency losing its important connection with other parts of ASIC, for example in relation to major corporate administrations, regulation of insolvent trading and of director and corporate misconduct that may have occurred in the lead up to, or during, an insolvency event.”

  The Government’s formal response to the Report was released by the APC on 13 October 2011 and may be found HERE.

Government says taskforce to align insolvency laws is unnecessary

 Official Inquiries, Productivity Commission 2010, Regulation  Comments Off on Government says taskforce to align insolvency laws is unnecessary
Oct 142011

The Australian Productivity Commission (APC) recommendation that a taskforce  be established to identify personal and corporate insolvency provisions and processes that could be aligned has been formally rejected by the Government.

The APC recommendations were made in its report in October 2010 on the Annual Review of Regulatory Burdens on Business: Business and Consumer Services (the Report). The Government’s formal response to the Report was released by the APC on 13 October 2011 and may be found HERE.

 In response to the APC’s recommendation (number 4.3) for a taskforce, the Government says that it:

” agrees that there should be greater consistency between the personal and corporate insolvency systems. Significant work is already being progressed by relevant government agencies to identify areas for greater harmonisation, and therefore the Government believes that establishing a taskforce is unnecessary and may duplicate work already being undertaken.  The Government will facilitate the closer alignment of the personal and corporate insolvency laws through its options paper, A Modernisation and Harmonisation of the Regulatory Framework Applying to Insolvency Practitioners in Australia, which was released on 2 June 2011.  This paper canvasses options for the registration, regulation and remuneration of participants in the corporate and personal insolvency industries.”