The Australian Institute of Company Directors (AICD) has lodged a submission with the Productivity Commission in response to its discussion paper Business set-up, transfer and closure.
The submission has most relevance for members of small-medium enterprises and not-for-profits incorporated under the Corporations Act as generally, they are most likely to find themselves in insolvent situations.
It is also relevant to listed company directors particularly those involved with companies at the lower end of the Australian Securities Exchange.
In its submission, AICD re-iterated its view that the primary objective of Australia's insolvency regime should be corporate recovery. It added that the insolvency regime should encourage entrepreneurialism and operate to save businesses that can be saved, in turn, encouraging innovation, economic growth and the preservation of employment.
AICD also highlighted its concerns that aspects of the current regime sometimes prevent the best stakeholder outcomes from being achieved. This included the need to address the director liability environment surrounding insolvency and that the potential for our proposed honest and reasonable director defence to overcome this issue.
The submission also encouraged the Productivity Commission to consider whether some restrictions on the rights of substantial secured creditors to immediately enforce their security during the voluntary administration process may assist to save businesses.
Click here to read the submission.
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