The Insolvency Law Reform Act 2016 which changes insolvency administration procedures was assented to on 29 February 2016. The practitioner registration and discipline provisions and expansion of ASIC’s powers will commence on 1 March 2017, as planned, but the Minister for Revenue and Financial Services has announced that the implementation of the majority of the Act is being delayed to 1 September 2017.

The Act amends the Corporations Act, the ASIC Act and the Bankruptcy Act to provide common rules for the conduct of administrations for both personal and corporate insolvency practitioners.

The delayed provisions include a new right of creditors to pass an ordinary resolution for the removal of a liquidator.

Changes to ASIC’s powers include:

• the ability of ASIC and the Court to appoint a registered liquidator to review the performance of an incumbent insolvency practitioner;
• The power of creditors, ASIC and the Court to appoint a cost assessor to review and report on the reasonableness of the remuneration and costs incurred during part or all of an administration;
• Increased powers to ASIC to monitor and audit the conduct of administrations by insolvency practitioners, including power to issue written directions to liquidators to lodge documents or provide information within 10 business days after the direction is give, power to direct a liquidator not to accept any further appointments and power to suspend or cancel a person’s registration as a liquidator.

The delayed changes include:

• increases in maximum penalties for reckless or intentional failures by a liquidator to maintain adequate and appropriate professional indemnity and fidelity insurance;
• changes to remuneration of insolvency practitioners, including introduction of a statutory maximum default remuneration of $5,000 (increasing with CPI for appointments in financial years beginning on or after 1 July 2017) for corporate insolvency without the need to convene creditors’ meetings in assetless or low asset administrations and liquidations;
• In the absence of any remuneration determination by creditors, the committee of inspection or the Court in relation to necessary work properly performed by an insolvency practitioner in connection with the external administration, the practitioner will only be entitled to reasonable remuneration for that work which must not exceed the maximum default amount;
• Introduction of a requirement of creditor or court approval for subsequent reviews of practitioner remuneration;
• Improvements to creditor rights including enabling creditors to remove a practitioner and appoint a replacement through an ordinary resolution, subject to the practitioner’s right to seek the court’s intervention to prevent their removal;
• The abolition of mandatory creditor meeting and practitioner reporting obligations;
• Creditors’ rights to make “reasonable” requests for information and records in connection with the external administration, requests which the practitioner is obliged to meet unless there are insufficient funds in the administration to meet the request.

The Government’s second tranche of insolvency reforms are part of the Government’s National Innovation and Science Agenda.