Media statement: Disappointment at another insolvency inquiry that misses the real issues
ARITA – Australian Restructuring Insolvency and Turnaround Association, the professional body for insolvency and turnaround practitioners, has expressed its disappointment at yet another inquiry into insolvency being announced that fails to address the need for a whole of system reform.
The Small Business and Family Enterprise Ombudsman has today announced her own 'inquiry' into insolvency with a very narrow focus.
It comes only two months after ARITA wrote to every Federal politician informing them that we were launching a Financial Recovery Law Reform Commission which will be led by an eminent group of commissioners representing key stakeholders and chartered to conduct a root and branch review of the insolvency regime.
'We find it extremely disappointing that this very narrow inquiry has been announced in the full knowledge that the Financial Recovery Law Reform Commission will more thoroughly address any issues it may uncover and much, much more,' said ARITA CEO John Winter.
'Given that the chair of the Carnell inquiry, the former Senator Wacka Williams, was involved in numerous insolvency-related senate inquiries and failed to drive any positive change to our insolvency regime, we hardly see any value in his role here. We are concerned that the reference group mentioned is also poorly formed.'
'The very pretext of the inquiry – seeking to turnaround failed small business – is unfortunately very naïve. By the time the vast majority small business reach a decision to appoint an insolvency practitioner, they are generally well beyond saving. That situation has been made worse by financial counsellors telling those in distress to stay away from Registered Liquidators and Trustees and the growth of dodgy pre-insolvency advisers.'
'We are also concerned that this inquiry is more about generating media attention than actually seeking to improve the insolvency regime.'
'Our President, Scott Atkins, recently said that the urgency for our Financial Recovery Law Reform Commission is driven by a range of factors: the recent commencement of a new term of our Commonwealth Government, ongoing criticisms of recent reforms which have created more red-tape for insolvency practitioners, the opportunity to innovate through the law as we have seen other countries do (most recently, Singapore), and the imperative to address the absence of a regime that properly deals with micro and small-to-medium enterprise (MSME) insolvency.'
'In writing to every Federal politician, ARITA has already outlined an 8-Point Plan for immediate action suggesting ways that policymakers and regulators can enhance Australia’s business rescue culture, better help indebted individuals back onto their feet, and ensure that creditors – from small businesses to the taxpayer – get a fairer deal from insolvency.'
Read ARITA's 8-Point Plan