On 23 September, Josh Frydenberg on behalf of the Morrison government, announced its intention to introduce a new insolvency process for small businesses—the most drastic reform to insolvency law in Australia in the last 30 years.
Based on the US Chapter 11 bankruptcy process, the new debtor-in-possession model is intended to provide small businesses with greater flexibility and business owners with greater control, with the aim to an increased chance of business survival.
Worrells Solvency & Forensic Accountants is pleased to see the government’s commitment to assisting businesses turnaround their affairs and recover from insolvency crises. We look forward to seeing the detail of the proposed legislation and the opportunity with other stakeholders to shape this insolvency reform.
The Australian Restructuring Insolvency & Turnaround Association (ARITA) has responded to the announcement with CEO, John Winter, asserting that while the professional association has advocated for reform since COVID-19, “this is a very complex change and there are significant issues in the detail of what we are seeing is being proposed.” ARITA has Worrells full support and commend its crucial advocacy work.
Critically Mr Winter noted that this an opportunity for the government to hinder the “exploding level of dodgy, unqualified advisors” in the industry. Worrells is also urging people to take advantage of its complimentary advice from its practice of registered liquidators and registered bankruptcy trustees whose advice is qualified, so those dealing with financial stress get the correct information when they need it most.
Worrells partner, Christopher Darin said, “today’s somewhat radical announcement is evidence that many people are in serious financial trouble and need assistance probably a lot sooner than they think. Our experience has proved time and time again that early intervention can make all the difference.”
Once further information is released, Worrells will provide its insights and guidance as to what the proposed process means for SMEs experiencing indicators of insolvency, as well as the likely impact the reforms will have on the Australian insolvency industry.
Worrells has 31 offices nationally and 26 partners, across Qld, NSW, ACT, Vic, SA, and WA. Worrells has been providing solvency management, insolvency administration, and forensic investigation services for over 47 years.
Kate Lee | Brand & Communications Manager