Significant insolvency legislative reforms were introduced in 2017. One year on, we assess what changes, if any, these reforms have had on the insolvency market in Australia.
The most significant insolvency law reforms in 20 years were introduced in 2017 to improve efficiency, communication, engagement and competition in external administration processes. The reforms were implemented in two tranches pursuant to the Insolvency Law Reform Act 2016 (Cth) (ILRA).
The Commonwealth has released an exposure draft of the Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018 (Bill) for consultation which will make key amendments to the Corporations Act 2001 (Cth) (Corporations Act). The Bill strengthens the current provisions aimed to deter companies from diverting assets to avoid the payment of employee entitlements on insolvency. The proposed changes will impact:
The dialogue is changing yet is the law enabling the practical change Directors need?
Achieving significant cultural shift in any business environment is no easy task, so it’s by no means ground-breaking to declare that after 1 year in operation, it still cannot be said that the new “Safe Harbour” legislation has resulted in a cultural change among directors.
It is fair to say that my initial reading of the Building Industry Fairness (Security of Payment) Act 2017 (BIFA) a little over 12 months ago left me shocked in terms of the sheer scale and magnitude of the reforms and changes proposed to be imposed on the industry.
In line with measures announced in the 2018 Federal Budget, the government has released a package of proposed insolvency reforms: Treasury Laws Amendment (Combating Illegal Phoenixing) Bill 2018, Insolvency Practice Rules (Corporations) Amendment (Restricting Related Creditor Voting Rights) Rules 2018 and accompanying explanatory material, for consultation. Consultation concludes on 27 September.
Corporate ventures are usually founded with the very best intentions, but as matters unfold disputes between investors are all too common.
The legal steps to resolve such disputes and assert control over a company can be complex and arduous.
However, there are good reasons for this due process, and it cannot be circumvented.
Illegal phoenix activity occurs when a company liquidates its operations to avoid paying its creditors, taxes and other regulatory payments. Before liquidation, the company transfers its assets to a newly created company which operates in the same, or similar industry and the same directors or close associates maintain control.
If in your position as director you allow your company to operate while insolvent and unable to pay debts, you could be liable to serious penalties.
The Australian Securities and Investments Commission (ASIC) outlines key considerations for directors whose companies are in financial difficulty or are insolvent.
Am I a director?
This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less.
A short week this week due to the public holiday in Western Australia.
This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less.