The Australian Institute of Company Directors today welcomed the release of draft legislation to reform Australia’s insolvency laws to provide better outcomes for companies, their employees and their creditors.
Australia’s current insolvency laws are out-dated and among the harshest in the world. They stifle innovation, and potentially cause businesses to be prematurely placed into voluntary administration or liquidation.
According to the most recent Director Sentiment Index, more than 70 per cent of directors believe there is a risk-averse decision-making culture on Australian boards.
AICD General Manager Advocacy Louise Petschler said the Federal Government and Treasury appeared to have taken on board advice from a wide variety of stakeholders in composing the draft legislation.
“A workable safe harbour can help boost productivity and save jobs,” she said.
“Instead of seeing businesses shuttered and people put out of work due to the threat of insolvency, a safe harbour framework would enable directors to work to secure a better outcome and potentially avoid voluntary administration.
“The proposed legislation is not a free kick. Employee entitlements and tax obligations are explicitly protected in the draft legislation. Directors would also have to show they were on a course of action to turn things around.
“A safe harbour has the potential to save jobs and add value to the economy that otherwise would be lost.”
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