New insolvency rules give creditors more power
The Federal Government has released draft legislation to employ the first phase of reforms to streamline Australia's personal bankruptcy and corporate insolvency rules.
Under the reforms, which the government says will decrease compliance costs by about $215 million, creditors can decide when and what information they are given by an insolvency practitioner.
Creditors will also now have the power to do away with badly performing insolvency practitioners through a resolution of creditors instead of needing a Court agreement.
A three-person committee with proper qualifications will have to interview new insolvency practitioners before their registration. They will have to renew their registration every three years.
"Increased transparency will make insolvency practitioners more accountable to creditors who will be able to obtain information on an administration at any time," a government statement said.
Other proposed changes to enhance returns to creditors include permitting electronic provision of documents, and streamlining remuneration approval processes.
The Australian Securities and Investments Commission will have more surveillance power to spot and investigate misconduct allegations.
Submissions on the draft Bill close on 19 December. The government will announce the second phase of reforms after it has deliberated on the recommendations from the Financial System Inquiry.
AUTHOR
Malavika Santhebennur
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