A new inquiry into corporate insolvency

The Joint Parliamentary Committee on Corporations and Financial Services has today announced a new inquiry into corporate insolvency law. Submissions are due by the end of November 2022. The terms of reference are broad:

Terms of Reference (as agreed on 28 September 2022)

Inquiry into the effectiveness of Australia’s corporate insolvency laws in protecting and maximising value for the benefit of all interested parties and the economy, including:

  1. recent and emerging trends in the use of corporate insolvency and related practices in Australia, including in regard to:
    1. temporary COVID-19 pandemic insolvency measures, and other policy measures introduced in response to the pandemic that may have had an effect on such trends and practices;
    2. recent changes in domestic and international economic conditions, increases in material and input costs for businesses and inflationary pressures more broadly, and supply shortages in certain industries; and
    3. any other contributory factors or events that have impacted insolvency patterns;
  2. the operation of the existing legislation, common law, and regulatory arrangements, including:
    1. the small business restructuring reforms (2021);
    2. the simplified liquidation reforms (2021);
    3. the unlawful phoenixing reforms (2019); and
    4. the operation of the Personal Property Securities Act 2009 in the context of corporate insolvency;
  3. other potential areas for reform, such as:
    1. unfair preference claims;
    2. trusts with corporate trustees;
    3. insolvent trading safe harbours; and
    4. international approaches and developments;
  4. supporting business access to corporate turnaround capabilities to manage financial distress;
  5. the role, remuneration, financial viability, and conduct of corporate insolvency practitioners (including receivers, liquidators, administrators, and small business restructuring practitioners);
  6. the role of government agencies in the corporate insolvency system, including:
    1. the role and effectiveness of ASIC as the corporate insolvency regulator;
    2. the ATO’s role and enforcement approaches to corporate insolvency, and relevant changes to its approach over the course of the COVID-19 pandemic;
    3. the role, funding and operation of relevant bodies, including the Assetless Administration Fund and the Small Business Ombudsman; and
  7. any related corporate insolvency matters.

I’ll be posting some thoughts on the terms of reference as I prepare my submission with Michael Murray.

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