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AIIP’s response to Insolvency Inquiry Report

This post is in response to Ms Kate Carnell overarching comments made Tuesday 21 July 2020.

AIIP representatives spent some time with her office at the beginning of the year. A great deal was not learnt or omitted. It is a very biased report skewed towards the owners and directors of businesses and is essentially a “liquidator bashing exercise”.

Taking a small sample size pool of directors complaints about liquidators without analysing the issues is not good enough for fuelling the argument for law reform on the run.

It includes recommendations for:

  • A measly $2,000 for the liquidator which barely covers the ASIC levy;
  • A ceiling of $10,500 in small liquidations with unsecured creditors up to $50K;
  • Pursuing voidable transactions only where there is a guaranteed return of at least 10% to creditors. How do you determine this one when lawyers costs are out of your control?
  • A simplified process where the liquidator realises and distributes the proceeds all in 30days!

Hopefully these recommendations will not see the light of day.

Comments by King & Wood and Baker & McKenzie both raise the impact on creditors and the issues related to insolvent trading.

The AIIP board hold to the following:

  • We support Kate Carnell Small Business Viability Review Assessment Voucher – have an external expert provide funded advice.
  • Our present insolvency laws – VA, CVL , DOCA, have demonstrated flexibly and can be used for the very large to the very small
  • It has been the regulations and liquidators’ levies that have unsustainably added to the cost. These are government induced.
  • All law reform takes an appropriate time frame and there are unexpected consequences if this process is rushed.
  • Any new provisions in the insolvency space require rules and procedures and staff training.
  • All new laws must be introduced to advisors and directors.

How much time have we got?

Not much, and more than that it took for Kate to have her report written.

The insolvency industry is ready. Has never been more ready. Don’t fiddle with the basic concepts that might only save a few but cause unimagined consequences.