Status Quo and Problem
The Insolvency Act 1967, the Insolvency Regulations 1970 and the Summary Instalment (District Courts) Rules 1970 currently set out the rules for bankruptcies, summary instalment orders, compromises with creditors and proposals.
The Insolvency Act 2006, not yet in force, is intended to repeal and update the Insolvency Act 1967. Importantly it will also introduce a new No Asset Procedure for first time debtors, as an alternative to bankruptcy and the other existing insolvency procedures. It will be relatively low cost, and is not intended to attract the same stigma as bankruptcy.
The Companies Act 1993 currently sets out the rules for the liquidation of companies. The Companies Amendment Act 2006, not yet in force, is intended to amend these rules. It provides for a new voluntary administration scheme as an alternative to liquidation. This is intended to facilitate the rehabilitation of companies, rather than necessarily result in their dissolution as often happens under liquidation. The Companies Amendment Act also introduces provisions dealing with the appointment of liquidators, voidable transactions, and the use of phoenix companies.
Both the Insolvency Act 2006 and the Companies Amendment Act 2006 require regulations to be made before they can be brought into force. Under the Insolvency Act 2006 this includes regulations to provide for forms for applications and notices, fees, and other procedural matters required for various provisions of the Act. Under the Companies Amendment Act 2006, regulations are required to deal with two matters in relation to the new voluntary administration regime, before this regime can be introduced.
This paper also sets out proposals relating to the fees for bankruptcy applications by debtors and applications for summary instalment orders. It also makes proposals for remuneration of supervisors under summary instalment orders, the Official Assignee in relation to summary instalment orders, bankruptcies and liquidations, and the remuneration for other liquidators. At present:
- the fee for bankruptcy applications is only $40 (GST inclusive), but the processing undertaken by the Court is much less than will be required from the Official Assignee;
- there is no fee for summary instalment orders, and the process is currently carried out by the Court rather than the Official Assignee; and
- the rates of remuneration of the Official Assignee, and liquidators have not been reviewed since 1994, and no longer reflect current costs.
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