Banking industry welcomes proposals for flexibility

under corporate insolvency laws.

Sydney, 19 January, 2010: The Australian Bankers’ Association (ABA) has welcomed the consultation on the package of proposed reforms to Australia’s corporate insolvency laws.

The ABA will be formulating a submission on the reform package which was announced today by the Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen.

David Bell, Chief Executive of the ABA, said the banking sector welcomed the Federal Government’s consideration of proposals that would provide flexibility for directors and creditors of troubled companies to work outside formal insolvency arrangements.

“There have been examples where a company has been propelled into an insolvency administration because of the director’s duty not to trade whilst insolvent but without sufficient opportunity for good faith consideration of options that could salvage the company,” Mr Bell said.

The reform proposals to corporate insolvency laws are innovative and a step in the right direction. The ABA and its members look forward to engaging positively in the consultation process.

The Federal Government’s decision to reverse the effect of the High Court’s Sons of Gwalia ruling is consistent with its proposals for a more flexible environment for company work-outs outside of formal insolvency arrangements and with its announcement last week about Australia as a financial services centre to ensure that our legislative environment is attractive to overseas investment. 

For further information:

Heather Wellard
Director, Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439

ENDS