The Murray Report accepts that “Australia’s external administration provisions are generally working well and do not require wholesale revision”.
ASIC is to retain its supervision of corporate insolvency with recommendations that it be better resourced and “should devote more attention to industry supervision including more proactively identifying and weeding-out misconduct”. This approach is consistent with the intentions of the recently released Insolvency Law Reform Bill and stated public intention of ASIC.
One recommendation that should have impact in the insolvency industry is Recommendation 39 that “priority areas of regulations” be made “technology neutral” and that future government policy and regulation adopt the principle of “technology neutrality”. The aim of the recommendation is to avoid regulation that “assumes or requires the use of certain forms of technology”, for example, a paper based environment. The Report considers that efficiencies should be available from “digital processes that are not being used” in external administration and bankruptcy regulation.
The Report refers to proposals for a US Chapter 11 style framework and protection for directors by a “‘safe harbour’ to permit restructuring firms in financial difficulty without invoking external administration processes”. The Report recognised that more work needs to be done on these proposals without reaching any tentative conclusions on the direction of further enhancement and made a recommendation that further consultation should be undertaken for possible amendments to provide additional flexibility (recommendation 36). This recommendation follows the general thrust of the report of not making major recommendations as the Australian financial system has generally performed well.