Small business insolvency reforms – Recognising the expertise of Registered Liquidators
The Exposure Draft and Explanatory Materials for the insolvency reforms to support small business have been released for urgent public consultation, with submissions due by Monday 12 October 2020.
The restructuring process and simplified liquidation reforms detailed in the Corporations Amendment (Corporate Insolvency Reforms) Bill 2020 clearly reflect the mechanisms articulated in ARITA’s 2014 thought leadership paper 'A Platform for Recovery' and we are proud to see this work come to fruition. As we outlined in our Town Hall meeting last week, this latest tranche of reforms will mean almost all of our policies first finalised in 2015 will become law. ARITA has led this debate and delivered it.
An important update from the initial news we shared last week is that the proposed new restructuring process now recognises the critical expertise of registered liquidators and specifies that only a registered liquidator may consent to act as a small business restructuring practitioner (SBRP). While a new sub-category of registered liquidator may still be detailed in the accompanying changes to the Regulations and Rules (yet to be released), ARITA was and remains strident in its advocacy since the announcement that a SBRP must be licensed and regulated to the same standards of education and competency as that of registered liquidators and trustees and it’s pleasing to see that this has already been recognised. This is essential in stopping the proliferation of dodgy pre-insolvency advisers further undermining the process.
ARITA fully supports the framework outlined in the Bill and is already well under way with our review to identify any aspects which may affect the practical operation of the provisions and its aim of delivering a cost effective mechanism for small businesses.
For such important and significant changes, we had hoped to have extensive consultation with our members, but, given the extremely short consultation period, that will obviously not be possible.
We strongly encourage you to get any feedback on or issues with the draft legislation into us within the next 48 hours though, as it will be vital assistance in us getting the right messages to Government. There’s two ways to get feedback to us:
- Firstly, you can get in touch with your elected Division Committee representatives directly. Information on your Division Committee members can be found here. You can email them via [email protected] (we will forward it on to them as a group).
- Secondly, of course, we would welcome you sending any thoughts or comments you have on the draft legislation directly to [email protected]. Given the extraordinarily tight timeframes the specialist team simply won’t be able to respond to everyone via this channel, but we will read everything that comes in and try to take it into account in our response to Treasury.
In addition to this, the ARITA team will be engaging heavily with your Board and elected Division Committee representatives in the few days we have to get a wide spectrum of views and expertise brought to the table on these reforms.
You can rest assured that ARITA is, as you would expect, pulling out all stops to ensure both Treasury and the Government take on board the views and expertise of the ARITA membership to deliver a new insolvency and restructuring framework that is functional and effective.
We will keep you posted on further developments and share our final submission when it can be made public.
Treasury website: Insolvency reforms to support small business
Exposure Draft - Corporations Amendment (Corporate Insolvency Reforms) Bill 2020
Exposure Draft Explanatory Materials - Corporations Amendment (Corporate Insolvency Reforms) Bill 2020