Submission: Small Business Restructuring, Simplified Liquidation & Trust law reform
08/07/2024
Following the Parliamentary Joint Committee's (PJC) report on Corporate Insolvency in Australia, and its recommendations for short-term reforms to improve the small business restructuring (SBR) and simplified liquidation (SL) processes and to implement a regime for dealing with insolvent trusts, ARITA provided detailed papers to government to assist with the reform process.
As the original proponent of including an SBR and SL process as part of Australia's insolvency regime (which was then endorsed by the Productivity Commission in its 2015 report on Business Set-up, Transfer and Closure), ARITA has a vested interest in ensuring that these processes are fully fit for purpose. Although liquidators are making the complex SBR legislation work, ARITA's view is that it could and should be better. SLs have proven to be anything but simple and remain largely unutilised. Trusts remain a vexatious area of insolvency, with significant court time required to deal with procedural issues due to the fact that Australia's insolvency laws fail to address them.
ARITA's suggestions for reform on SBRs and SLs will improve these processes to make them work effectively and efficiently for all stakeholders of companies in financial distress. The work we have done with Dr Nuncio D'Angelo, Partner at Norton Rose Fulbright and an expert in Trusts, if introduced into law, will reduce the costs of dealing with insolvent trusts and again improve the outcome for stakeholders.
These recommendations were provided to the Assistant Treasurer in February 2024.
We encourage the government to embrace the recommendations of the PJC and move forward with these important reforms.
Read ARITA's recommended changes to SBR and SL and Dr D'Angelo's and ARITA's recommendations for laws to deal with insolvent trusts.