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Government releases insolvency law reforms for consultationTuesday, March 28, 2017
As part of the National Innovation and Science Agenda, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, has released draft legislation to reform Australia’s insolvency laws and an accompanying explanatory statement for public consultation.
The draft legislation, which aims to promote a culture of entrepreneurship, creates a ‘safe harbour’ from personal liability for company directors and institutes a stay on ‘ipso facto’ clauses during a formal insolvency process.
Minister O’Dwyer said the proposed safe harbour will apply to directors of companies undertaking a restructure and will protect them from personal liability for insolvent trading in certain circumstances.
The amendments will also make ipso facto clauses, which terminate or amend a contract merely because a company has entered into a formal insolvency process, unenforceable. Making these clauses unenforceable will give companies a greater chance to successfully restructure and may increase the likelihood of being able to sell the business as a going concern.
Submissions are due by 24 April 2017 and can be sent to firstname.lastname@example.org.