Corporate technical insolvency reforms - IPA submission
Further to the IPA notification to members below, the IPA has now sent to Treasury a schedule of suggested changes to Chapter 5 of the Corporations Act. These include:
- apparent errors in drafting - s 161A(3);
- unduly complex wording - a report that is "made up to a day not later than 30 days before the day when it is prepared” - s 421A;
- old wording and concepts - the reference to "taxed costs" in s 466;
- inconsistent wording - between s 471B and 500(2);
- judicial criticisms of drafting, for example s 536 - see Vink v Tuckwell ; and s 601AH - see Data Tech Communications (Aust) Pty Ltd  and Foxman v Credex .
We also comment more broadly on:
- whether the continued separation of provisions in relation to compulsory liquidations and voluntary liquidations remains valid; and
- on the varied timing and service provisions.
Any queries or further suggestions can be sent to [email protected].
Michael Murray Legal Director IPA
Treasury in Canberra has advised the IPA that it would like to have members’ views on some possible corporate insolvency reforms that could be considered for introduction to parliament in the future. Work on these issues needs to be settled in advance.
Reforms may include those in the nature of mechanical/technical amendments in relation to the relation-back provisions, and miscellaneous changes arising out of the major 2007 changes to the Corporations Act. It is anticipated that there may also be amendments arising out of CAMAC's November 2008 ‘Issues in External Administration’ report, although Treasury advises that no decisions have been made on that report at this time.
Treasury is primarily looking for errors and inconsistencies in the Corporations Act that require fixing, for example, incorrect section references, inconsistent wording between sections, time limits that may not be clear or are inconsistent, and so on. Two examples of possible changes are:
- Section 500(2) CA stays any “action or other civil proceeding” against the company in a creditors’ voluntary liquidation; in contrast, section 471B CA stays “a proceeding in a court against the company” or in relation to its property.
- Should the apparent error in the last amendments to s 497(1), requiring the creditors’ meeting to be “convened” within 11 days rather than “held” within 11 days, be corrected, or is the current provision satisfactory?
As any possible amendments would probably also require changes to the Corporations Regulations as well, Treasury is also seeking comments on any errors and inconsistencies in the regulations that require correction.
Although Treasury always welcomes comments and observations from the insolvency profession, for the purposes of this process it is not looking for matters that require significant policy decisions.
IPA members are asked to send any suggestions to the IPA - [email protected]. We will collate and send these to treasury in the new year.
Michael Murray, Legal Director [email protected]