Government Response to PC's Inquiry into Business Set-up, Transfer and Closure

The Federal Government has released its response to the Productivity Commission’s Inquiry into Business Set up, Transfer and Closure.  (The Productivity Commission's final report was delivered to Government on 30 September 2015 and was released publicly on 7 December 2015.)

The final three sections of the Government Response - relating to Business Restructuring, Corporate Insolvency and Personal Insolvency (pages 23 to 32 of the Response) - will be of particular interest to members.

The Government Response includes references to changes or reforms which have already been enacted (eg, the Insolvency Law Reform Act 2016) and which are currently the subject of the Government's focus (eg, safe harbour/ipso facto reforms and one-year bankruptcy discharge).

Specifically, the Government has taken the following position in relation to the recommendations directly relevant to our profession:

Productivity Commission 2015 proposals

Government Response

Rec 12.1: One-year bankruptcy

Supported - NISA

Rec 12.2: Bankruptcy contributions to continue after bankruptcy

Supported - NISA

Rec 14.1: VA - one month for a company to show its viability

Not supported

Rec 14.2: Safe harbour

Supported - NISA

Rec 14.3: Pre-positioned sales

Not supported

Rec 14.5: Ipso facto moratorium

Supported - NISA

Rec 14.6: Scheme of arrangement moratorium

Supported – under consideration

Rec 15.1: Streamlined SME liquidations

Supported in principle

Rec 15.2: Public interest administration fund

Noted

Recs 15.3 & 15.4: Receiver’s duty to unsecured creditors

Supported in principle

Rec 15.5: Review of the Fair Entitlements Guarantee (FEG)

Supported

Rec 15.6: Director identity number

Noted

* NISA – National Innovation and Science Agenda

ARITA is pleased to see that many of the Productivity Commission’s recommendations - which were highly reflective of ARITA thought leadership positions - have been supported by the Government.  However, it is disappointing that some aspects have not been fully supported and we continue our focus on the ongoing improvement of Australia’s restructuring and insolvency regime.

Member comment and feedback is welcome.