Franchise Council of Australia

Insolvency practices inquiry launched

Insolvency practices inquiry launched

The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has announced an inquiry into the insolvency system, to investigate if current insolvency practices achieve the best possible outcome for small and family businesses in financial trouble.

The inquiry will look at the insolvency system and uncover if it encourages practitioners, in the first instance, to restructure the small or family business to turn it around. According to Ms Carnell, the Banking Royal Commission wasn’t asked to look at the role of insolvency practitioners and that was a missed opportunity.

“We know there is a very low success rate in restructuring Australian businesses under external administration and the impact of the insolvency process is often devastating for the small business owner,” said Ms Carnell.

The Insolvency Practices Inquiry will examine:

  • the existing insolvency system through the experience of small business
  • the degree of transparency of the governance, processes and costs of practitioners including legal advisers, valuers, investigating accountants, administrators, receivers and liquidators
  • how the insolvency of a small or family business may lead to bankruptcy for the owners
  • how the framework impacts the practices and fees of insolvency practitioners

Small and family businesses that have faced financial difficulties and restructured or wound up their business can share their stories by completing:

An interim report will be released in December with a final report to be handed down in February 2020.