The Insolvency Law Reform Act 2016 (Cth) is the most comprehensive reform of bankruptcy and corporate insolvency laws in more than twenty years. It inserted into the Corporations Act a new s 600K which incorporates the Insolvency Practice Schedule (Corporations) which sets out the main provisions relating to companies under voluntary administration; subject to a deed of company arrangement; in liquidation or provisional liquidation.
The most significant features of the Insolvency Practice Schedule (Corporations) are:
- removal of the distinction between official and registered liquidators;
- enhanced registration and disciplinary frameworks applicable to registered liquidators;
- significant changes to rules dealing with remuneration of external administrators; including introduction of a statutory maximum default remuneration for corporate insolvencies involving companies with few or no assets, removing the need to convene creditors’ meetings and conferring a power on creditors, ASIC and the court to appoint a cost assessor to review and report on the reasonableness of the remuneration and costs incurred in the administration;
- abolition of certain mandatory creditor meetings and external administrator reporting obligations;
- enhanced creditor rights that enable creditors to remove a registered liquidator and appoint a replacement by ordinary resolution subject to the liquidator’s right to apply to the court to prevent removal. Creditors also have the right to make reasonable requests for information and records which the liquidator is obliged to meet unless there are insufficient funds; enabling liquidators to assign certain rights of action to third parties such as in relation to voidable transaction claims and insolvent trading; and
- increased powers to ASIC to monitor and audit the conduct of external administrations including powers to issue written directions to comply with Corporations Act requirements, to direct a liquidator not to accept any further appointments and to suspend or cancel a liquidator’s registration.