It was a busy year in the insolvency arena in 2012. Some big names suffered financial difficulties including Darrell Lea, Payless Shoes, WOW Sight n Sound, Hastie Group, St.Hilliers, Kell & Rigby and Banksia Financial just to name a few.
It was also a relatively busy year for new legislation impacting on the insolvency industry. Here is a summary of some of the new legislation introduced or amendments made to existing legislation during the 2012 year:
Personal Property Securities
On 30 January 2012 we saw the commencement of the long awaited Personal Property Securities Act 2009 (Cth). The legislation was introduced as a national scheme to simplify the regulation of personal property securities in Australia, which were regulated by a complex mix of State and Federal legislation.
The Act also created a single online register for personal property securities, the Personal Property Securities Register (the PPSR).
Changes to Director Penalty Notice regime
On 30 June 2012, the Tax Laws Amendment (2012 Measures No. 2) Act 2012 (Cth) commenced. This Act amended the Australian Taxation Office’s Director Penalty Notice regime with the following significant changes being made:
- Extending the director penalty regime to make directors personally liable for their company’s unpaid superannuation guarantee amounts.
- Ensuring that directors cannot discharge their director penalties by placing their company into administration or liquidation when unpaid PAYG withholding or superannuation guarantee amounts remain unpaid and unreported 3 months after their due date.
- In some instances, making directors and their associates liable to PAYG withholding non-compliance tax (effectively reducing credit entitlements) where the company has failed to pay amounts withheld to the Commissioner. The tax on directors and their associates is imposed by the Pay as you Go Withholding Non Compliance Tax Act 2012 (Cth).
Winding up abandoned companies by ASIC
The Corporations Amendment (Phoenixing and Other Measures) Act 2012 (Cth) commenced on 1 July 2012. In summary this Act amended the Corporations Act 2001 to provide ASIC with a discretionary power to place a company into liquidation when certain criteria are met. This new power provides a process to wind-up a company to facilitate payment of employee entitlements where a company has been abandoned.
In addition, the Act included changes concerning the publication of notices relating to external administrations in conjunction with new regulations (see below).
New requirements for publication of Insolvency Notices
The Corporations Regulations 2001 (Cth) were amended by the Corporations Legislation Amendment Regulation 2012 (No 1) (Cth) to prescribe the manner of publication of corporate external administration notices to satisfy an insolvency practitioner’s publication obligations under the Corporations Amendment (Phoenixing and Other Measures) Act 2012 (Cth).
From 1 July 2012, ASIC commenced a website for the publication of certain insolvency and other notices (https://insolvencynotices.asic.gov.au). Most advertisements which were previously required to be placed in newspapers and other notices required to be placed in the Commonwealth Business Gazette are required to be posted on this website.
GEERS now ‘Fair Entitlements Guarantee Scheme’
From 5 December 2012 the Fair Entitlements Guarantee Act 2012 (Cth) commenced operation and replaced the Federal Government’s General Employee Entitlements Redundancy Scheme (GEERS) with the Fair Entitlements Guarantee (FEG) scheme.
In the main, the FEG replicates the assistance provided to employees through the previous GEERS administrative scheme. The key changes under the FEG include limiting the lodgement of claims to 12 months from the end of employment or the date of insolvency, restricting access to the FEG to Australian citizens, and providing claimants with the ability to seek a review of a claim decision by the Administrative Appeals Tribunal.