A Critical Comparison of the English and Australian Insolvency Regimes: where we are and where are we headed?

Australia’s insolvency regime has been under close scrutiny in recent times, but with more focus on the profession and its regulation – remuneration and independence - than on insolvency.

Australia’s insolvency regime has been under close scrutiny in recent times, but with more focus on the profession and its regulation – remuneration, independence and oversight - than on the substance of insolvency. Assessing whether the regime properly deals with business distress through an efficient, cost effective and fair process is only belatedly receiving attention.

Even then populist level debate exists about the serious issues - costs and quality and creditor returns, the protection of directors, and at the higher end, about the approach of US Chapter 11. At a higher level, economists are looking at the need for promotion of entrepreneurial risk and a change of business culture. As to the latter, Australia’s thinking is said to be out of kilter internationally, including as against a more adventurous US, and England. 

Australia has not looked at the bigger issues. The world has changed since the Harmer Report, and that of Cork, well though their reforms have served us. New questions first need to be answered before reforms are considered: what should we reasonably expect from an insolvency regime, and from its practitioners? and what should we expect of others - directors, businesses and their creditors in particular? 

Where do each of Australia and England stand on these issues? Overall, in some aspects, Australia seems to be more advanced, but structurally and culturally, England may be ahead.  What can one learn from the other in deciding on their future directions?

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