Recent IPA submissions - Productivity Commission; Bankruptcy Regulations
4.8.10: The IPA comments on the draft Productivty Commission report on the need to align personal and corporate insolvency laws is enclosed. We will monitor the progress of the final report.
The IPA submission on the draft bankruptcy regulations is also enclosed. It represents the views of the IPA and many of its members who gave their informed input into the submission. We will monitor the progress of these regulations.
Submissions are called for on the draft bankruptcy remuneration regulations by Saturday 31 July 2010.Trustee IPA members should note this proposed process for notices to be given by trustees about their remuneration and disbursements – proposed regulations 8.12 to 8.12D.
The regulations will require the following notices to be given:
- the trustee must give the bankrupt and creditors notice of the method by which the trustee seeks to be remunerated and the rate of remuneration as well as an estimate of the expected amount of the trustee’s remuneration – this is already required by regulation 8.12 but the amendments will provide that this notice must be given within 28 days after the trustee is appointed,
- where the trustee is seeking creditor approval of remuneration, the trustee must give the creditors a notice describing the work undertaken or likely to be undertaken, details of the number of hours to be charged by the trustee and other staff and the proposed total remuneration for the work – this notice must also include a statement that the costs incurred are necessary and reasonable having regard to the value and complexity of the administration and a report on work completed, in progress and still to be undertaken – this notice must be given at the same time as the trustee sends a proposal to creditors seeking approval of remuneration,
- when the remuneration claimed by the trustee reaches the amount fixed by creditors or approved by the Inspector-General, or where the trustee is finalising the estate without the remuneration having reached that amount, the trustee must give the bankrupt and creditors a notice setting out the total remuneration claimed and details of the work performed and explaining any variation from the amounts set out in the notice given when the trustee sought creditor approval – this is the notice which will trigger the right of the bankrupt or a creditor to apply for a review of the trustee’s remuneration, and
- where the trustee is required to make payments to third party service providers, the trustee must give the bankrupt and the creditors a notice describing the work performed by the third party and the amount to be paid – this notice must be given within 7 days of receiving the claim and advise the bankrupt and creditors that they may, within 14 days after receiving the notice, request the trustee to request the Inspector-General to review the amount of the payment – this requirement does not apply where the services provided by the third party are routine or the proposed payment does not exceed $100.
The Attorney-General's Department has released an exposure draft of amendments to the Bankruptcy Regulations and the accompanying Explanatory Statement. These amendments relate to remuneration of registered trustees and the new infringement notice regime which will apply as an alternative to prosecution for some offences of strict liability. Both measures relate to amendments in the Bankruptcy Legislation Amendment Act 2009 which has been passed by Parliament. The amendments will commence on a date to be proclaimed, likely to be later this year.
It is second IPA submission to the Senate inquiry, at 3.1, the IPA drew attention to this new remuneration regime as being one that may usefully be adopted in corporate insolvency.
The Attorney-General’s Department invites comments by 31 July 2010. Member comment is invited.
Michael Murray IPA Legal Director [email protected]