“Cost of living”, “electricity prices”, “climate change”, “housing”, “healthcare” and “insolvency law reform”.  Guess which one of these topics was not a prominent feature of the recent Federal election?  No prizes for guessing “insolvency law reform” did not feature at all….

Despite its importance to those of us who practice in the area, the topic of insolvency law was unsurprisingly not front and centre to the recent election.   However, the outcome of the election and the incoming government’s economic priorities together with the increasing headwinds of global economic uncertainty will influence the ultimate agenda of insolvency law reform.

The current status of Australia’s corporate insolvency laws

In July 2023, the Parliamentary Joint Committee on Corporations and Financial Services released its final report following a comprehensive inquiry into Australia’s corporate insolvency laws, initiated on 28 September 2022.  The report was tabled in the House of Representatives in August 2023 and marked the first major review of Australia’s insolvency regime since the 1988 Harmer Report.

The Report concluded, amongst other things, that the current system is overly complex, costly, and difficult to navigate, creating inefficiencies for debtors and creditors alike.

For those of us who have regular exposure to the insolvency laws, many of the conclusions reached in the report concerning complexity, inefficiencies and cost ring true. 

Recommendations from the Parliamentary Joint Committee on Corporations and Financial Services

The Report set out 28 proposed recommendations. The big ticket item was a recommendation for an independent, comprehensive review of both corporate and personal insolvency laws with the aim of simplifying the framework.

Other recommendations included simplifying small business restructuring arrangements, the liquidation process, regulations directed at pre-insolvency advisors, together with addressing issues with the unfair preference claim regime.

No progress on the recommendations

As of mid-2024, the government had yet to act on any of the recommendations.  The intervening election and other economic priorities have seemingly relegated any root and branch reforms of the insolvency laws to lower priorities for the government. 

Where to from here?

Professionals in the industry should stay informed about these potential changes and be prepared for the impact they may have on their practice and business.

At Holman Webb Lawyers, we are monitoring the potential changes closely.  We will provide updates on any progress, but please don’t hesitate to get in touch with our Commercial Recovery team or Insolvency and Restructuring team if you have any questions or require any assistance.