Banking association welcomes corporate insolvency proposals
The Australian Bankers’ Association (ABA) has welcomed proposed government reforms that would provide flexibility for directors and creditors of troubled companies to work outside formal insolvency arrangements.
The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, announced open consultation on proposed reforms to Australia’s corporate insolvency laws, which the ABA has described as innovative and a step in the right direction.
“There have been examples where a company has been propelled into an insolvency administration because of the director’s duty not to trade whilst insolvent but without sufficient opportunity for good faith consideration of options that could salvage the company,” said ABA chief executive David Bell.
The ABA stated that the Federal Government’s decision to reverse the effect of the High Court’s Sons of Gwalia ruling is consistent with its proposals for a more flexible environment for company work-outs outside of formal insolvency arrangements and with its drive to create a legislative environment attractive to overseas investment.
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