Bankruptcy system – Options Paper January 2022
The submission to the Attorney-General’s Department in response to the Bankruptcy System Options Paper published in January 2022 (Options Paper) was prepared by the Insolvency & Restructuring Committee of the Business Law Section of the Law Council of Australia (the Committee).
The key matters the Committee wishes to bring to the Department’s attention are as follows:
(a) The Committee does not support a one-year bankruptcy and expresses concern that the attempts to address issues with its potential operation will lead to greater uncertainty, complexity and cost.
(b) The Committee supports a more efficient mechanism for dealing with the vast number of “consumer” bankrupts. With the potential for increased insolvency risk for consumer bankrupts driven by the increase in “buy now pay later” credit products there is now greater need than ever to address whether such insolvencies ought properly be administered under the guise of the existing Bankruptcy Act 1966 (Cth) (Bankruptcy Act) regime or whether they should more properly be regulated under a separate and distinct consumer debt relief enactment.
(c) If, nevertheless, government policy is that a one-year bankruptcy period should be introduced then it ought not be the default period. Rather a bankrupt should be required to apply for early discharge upon the conclusion of one year with an open-ended discretion of the bankruptcy trustee professional whether to grant such application.
You can read the full submission below.