ARITA welcomes AG’s bankruptcy roundtable announcement

03/02/2023

ARITA – the Australian Restructuring Insolvency & Turnaround Association – warmly welcomes Attorney-General Mark Dreyfus’s announcement of an industry leaders roundtable to urgently look at reforms needed for Australia’s personal insolvency regime.

“This is a critical and welcome step by the Attorney-General towards a more holistic review of our insolvency regime which, he rightly points out, has not had a comprehensive review since the Harmer Inquiry of 1988, despite some excellent work by the Productivity Commission in 2015,” said ARITA CEO John Winter.

“What needs to be understood is that the majority of business insolvencies are small business insolvencies, and we need a unified insolvency framework that brings together not only companies and their owners, but trusts and partnerships as well. A modern and efficient insolvency systems needs to reflect the realities of the Australian economy in the 21st century.

“Today’s announcement by the Attorney-General comes alongside the excellent and bi-partisan work being done by the Parliamentary Joint Committee on Corporations and Financial Services inquiry into corporate insolvency laws.

“As we’ve been suggesting to government, whilst there needs to be some urgent fixes put in place in case there is any slowdown in the economy to support businesses and individuals in financial distress, there is a much greater need of a larger, root and branch review undertaken to ensure that our insolvency regime is fit for the future," Mr Winter said.

“How we manage financial distress matters, not just for the individuals and companies that are impacted, but an efficient system that deals with insolvency is a major contributor to economy-wide productivity according to the OECD.

“We are delighted that the government is getting on with the process of law reform – law reform being the ordinary business of good government. And we especially note that this comes after the government repealed laws relating to litigation funding that were going to stymie the chance for liquidators to use litigation funding to make recoveries for creditors.

“ARITA looks forward to contributing to the work being done by the Attorney General to support our economy and, especially, individuals in financial distress,” Mr Winter said.