I am a professional business consultant with over 40 years of experience helping businesses across most sectors to manage the complexities of bankruptcy and insolvency when there are no alternative options. I am more than a little disgruntled that the bill to reduce the bankruptcy exclusion period from three (3) years down to one (1) year has been conspicuously ignored since 2016.
Of course, one of the key questions around this entire bill proposal is: Will this really reduce economic barriers and improve economic growth? In my opinion, it will! Of course, my opinion is open to conjecture. Will reducing the period to one year suit everyone’s situation? Most likely, not! Of course, we need to address how this reduction would potentially affect the permanent records of bankruptcy in the National Personal Insolvency Index, employment, travel, et al.! Nor is it responsible to ignore the complexities within the legislation. I have no doubt that as you are reading this, you will be thinking of various other key points for and against the proposed change. However, taking all aspects of the debate into account, we as a nation need to reassess the ‘one-size-fits-all’ three-year exclusion period, and in particular, evaluate how this then impacts employment, innovation, entrepreneurship, et al.
I am sure most of us can recall that in April 2016, the Australian Federal Government announced three major insolvency law reform proposals in its Improving Bankruptcy and Insolvency Laws Proposal Paper (‘The Proposal Paper’). On October 19, 2017, the Bankruptcy Amendment Enterprise Incentives Bill, 2017 (‘The Bill’) was introduced in the Senate. The Bill was for the Bankruptcy Amendment (‘Enterprise Incentives Act, 2017’), which means if the Bill were enacted, it would result in the amendment of the Bankruptcy Act, 1966.
Among the proposed changes in the Proposal Paper was the reduction of the default bankruptcy period from three (3) years down to one (1) year in the event that ‘no offence has been committed’. In the event that bankruptcy is reduced to one year, it is proposed that this action will:
Not only would this legislation be massively beneficial in assisting new businesses to drive innovation and entrepreneurship, it would ease the strain on trustees and the AFSA, because it is predicted that there will be a surge in insolvencies due to the economic impacts of COVID-19.
As a fellow Australian and businessperson, please take just 30 seconds of your time to sign the petition (via clicking the link below) to urge the Federal Government to urgently prioritise the proposed Bill. At the very least, there needs to be an imminent amendment to the legislation, with a clause that states that each case will be assessed based on its individual circumstances. Once an application has been assessed, it will be categorised as either a one (1) or three (3)-year exclusion period, with individually evaluated restrictions.
It is our belief that this is an extremely important priority given our current business environment, which independent Australian economists have predicted will be a protracted and severe recession due to COVID-19. It goes without saying that if there is a massive spike in bankruptcies and insolvencies, this will (without question!) have an enormous negative impact across the country, with dire enduring impacts on both individual Australians and the Australian economy at large. There are a colossal number of businesses across all sectors within Australia who are already remarkably close to the wire. So, the time to act is NOW! The legislated change needs to be urgently prioritised for the sake of countless Australians who’re doing it very tough!