Corporate insolvency in Australia

REPORT - July 2023

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Full Report (PDF)

Contents

Members

List of recommendations

Acronyms and abbreviations

Overview of findings

Executive summary

Chapter 1 - Introduction

Inquiry commencement and terms of reference
Conduct of the inquiry
Structure of this report
Acknowledgements
Notes on references

Chapter 2 - A snapshot of corporate insolvency in Australia

Overview of Australia’s corporate insolvency regime
The Australian insolvency framework
Historical context
Corporate insolvency and COVID-19 pandemic emergency responses
The current state of corporate insolvency: a statistical snapshot

Chapter 3 - The purposes and performance of the corporate insolvency system

The purposes of the corporate insolvency system
Assessments of the system and calls for a comprehensive review
Other recent calls for a comprehensive and holistic review
Committee view

Chapter 4 - A comprehensive review: structure, scope and process

Review structure and process
Review scope and content

Chapter 5 - Harmonisation of corporate and personal insolvency

Overview of the division between corporate and personal insolvency
Prior calls for and steps toward harmonisation
A single insolvency system?
Committee view

Chapter 6 - Data and benchmarks for analysis and review

Historical consideration of data availability
Existing data on the state of the insolvency system
General observations about the need for better insolvency data
Specific areas where better data may be useful
International analysis frameworks
Committee view

Chapter 7 - Pathways for insolvency, restructuring, liquidation, and deregistration

Introduction
Overview of pathways
Informal workouts, safe harbour, and prepacks
Small business restructuring
Simplified liquidation
Voluntary administration
Members voluntary liquidation
Deregistration
Committee view

Chapter 8 - Administration of liquidations and insolvency

Background
Registration requirements of insolvency practitioners
Regulation of insolvency practitioners
Remuneration of insolvency practitioners
Independence requirements
Pre-insolvency advisors

Chapter 9 - Assetless administrations and the role of the state

The public functions of insolvency processes: who pays?
The problem of low- and no-asset insolvent companies
Assetless Administration Fund (AA Fund)
Public liquidator

Chapter 10 - The role of government agencies in insolvency

Regulation of corporate insolvency
ASIC’s activities and approaches to enforcement
Reporting obligations to ASIC and the regulator’s response
Reporting obligations to creditors
Insolvent trading
Illegal phoenixing
Australian Taxation Office (ATO)

Chapter 11 - Assets of the company and creditors' priority

Introduction
Assets of the company
Other mechanisms relating to creditors' priority

Chapter 12 - Secured assets and creditors and the PPS Act

Introduction
Background on personal property securities
Committee view

Chapter 13 - Voidable transactions and unfair preferences

Introduction
Voidable transactions
Unfair preferences
The Badenoch (Gunns) decision

Chapter 14 - Property held in trust

Trusts in the Australian economy
Previous consideration of trusts in insolvency law
Regulation of trusts in insolvency
Ejection of trustee in insolvency
Register of trusts
Committee view

Appendix 1 - Submissions and additional information

Appendix 2 - Public hearings

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