On 12 July 2017, the AICD made a submission to the Senate Standing Committee on Economics Inquiry into a bill which would see the significant reform of insolvency law, through the introduction of an insolvency safe harbour and statutory stay on ipso facto clauses.
The bill is titled the Inquiry into theTreasury Laws Amendment (2017 Enterprise Incentives No 2.) Bill 2017.
The AICD welcomes the progress of this important reform. Australia’s existing insolvency laws are amongst the harshest in the world. The perverse and unintended consequence of the current framework is that directors are forced down the path of formal insolvency too early in circumstances where reasonable prospects of recovery exist, destroying value and jobs.
The AICD welcomes the Bill’s introduction of a safe harbour, balanced with safeguards on important issues such as employee entitlements, as a critical step in building a culture of restructure and recovery in corporate Australia.
In this submission, the AICD has made suggestions for improvements to the Bill that we consider would assist in achieving the policy objectives of the reform, set out below for the Committee’s consideration.
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