By Renee Smith a Solicitor of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group.
On 19 October 2017 the Government introduced the Bankruptcy Amendment (Enterprise Incentives) Bill 2017 (“the Bill”) into Parliament. The draft bill contains significant reforms to Australia’s bankruptcy laws in a number of ways for both bankrupts and the trustees and insolvency practitioners that manage the bankrupt estates.
There are a number of proposed amendments to the Bankruptcy Act 1966 (“the Act”).
Most significantly, if passed, the Bill will enable a bankrupt to be discharged after only 12 months, rather than the normal discharge period of 3 years in the Act currently.
Other amendments include:
- Reducing other time periods associated with the bankruptcy such as the disclosure of bankrupt status when applying for credit, seeking permission for overseas travel and the attainment of certain licences and entering into certain professions will also all be reduced to 1 year;
- Extending the income contribution obligations for discharged bankrupts for a minimum of 2 years following discharge or in the event that a bankruptcy is extended due to non-compliance, for 5 to 8 years;
- Along with a number of changes to definitions and repealing of consequential redundant sections of the Act.
According to the government the measures in the Bill are designed to:
- Ensure personal insolvency practitioners are able to adequately and appropriately administer a bankruptcy by ensuring persons who are under an obligation to notify change in contact details continue to do so;
- Ensure credit providers continue to have sufficient personal insolvency information to accurately assess an individual’s credit worthiness; and
- Maintain the integrity of the regulatory and enforcement frameworks under which the Australian Financial Security Authority operates.
There are significant practical difficulties with trying to enforce bankruptcy obligations on a discharged bankrupt, so the implementation of this legislation, if passed, is likely to impact bankruptcy trustees significantly.
To review the proposed reforms, a copy of the Bill and amending Act can be found here.
If you would like more information or advice in relation to insolvency, restructuring or debt recovery law, contact a Principal of the Matthews Folbigg Insolvency, Restructuring & Debt Recovery Group:
Jeffrey Brown on (02) 9806 7446 or email@example.com
Stephen Mullette on (02) 9806 7459 or firstname.lastname@example.org