A bill has recently been launched at the federal level which would have significant changes for Australia's insolvency laws.
The Insolvency Law Reform Bill aims to revise the regulatory framework that is currently used to manage the insolvency process for both individuals and corporations. If the bill passes, it is likely to come into effect in February 2016.
Among the main changes are efforts to reduce the costs and complexity that comes with administering an insolvency case. Those who act as external administrators in a liquidation case are also expected to receive remuneration for their services under the proposed changes, while also facing new registration rules.
For creditors involved in a liquidation case, there are also going to be a range of new rules, especially around their access to information. Creditors will be able to request documentation and reports on a liquidation case, provided a majority apply.
This will also operate alongside current disclosure rules that relate to specific types of insolvency, such as voluntary administration.
If creditors are unhappy with the performance of an external administrator, they will also have the option of appointing new liquidators. This decision will need to be agreed on through a resolution, reached during a meeting of the relevant creditors.
In cases where an administrator has been dismissed unfairly, they will have the option of seeking a Court ruling to have them reinstated in that position.
This is a significant change from the current rules, as there are only a limited number of instances when an external liquidator can be dismissed from this position.
If you would like more information on the future changes to insolvency law, or require legal advice on this process under existing regulations, make sure you get in contact with a commercial lawyer.