The Hon Kelly O’Dwyer MP, the Minister for Revenue and Financial Services, announced on 23 August 2016 that the Insolvency Law Reform Act 2016 (Cth) (ILRA), which was set to commence on 1 March 2017, will now commence in two stages as follows:
- Stage 1 on 1 March 2017; and
- Stage 2 on 1 September 2017.
The major reforms – which will see insolvency processes change and amend the Corporations Act 2001 (Cth) including to facilitate enhanced creditor empowerment and democracy in formal insolvencies – will be contained in Stage 2 now commencing on 1 September 2017. These amendments will also be accompanied by the Insolvency Practice Rules (Rules) which are yet to be released.
Purpose of ILRA
Briefly, the purpose of the ILRA is to provide a more modern and efficient process of insolvency
procedures by harmonising the rules to:
- remove unnecessary costs and increase efficiency in insolvency administrations; align the registration and disciplinary frameworks that apply to registered liquidators and registered trustees;
- align a range of specific rules relating to the handling of personal bankruptcies and corporate external administrations;
- enhance communication and transparency between stakeholders;
- promote market competition on price and quality;
- improve the powers available to the corporate regulator to regulate the corporate insolvency market and the ability for both regulators to communicate in relation to insolvency practitioners operating in both the personal and corporate insolvency markets; and
- improve overall confidence in the professionalism and competence of insolvency practitioners.
Stage 1 – 1 March 2017
1 March 2017 will see the commencement of the provisions under the ILRA relating to:
- professionalism and competency of insolvency practitioners; and
- practitioner registrations and discipline provisions and enhancements.
Stage 2 – 1 September 2017
1 September 2017 will see the commencement of the provisions under the ILRA, and the Rules,
relating to:
- reforms to the insolvency administration processes;
- enhancing efficiency; and
- improving communication and increasing competition.
