Industry leaders discuss insolvency reforms
Higher interest rates and economic uncertainty are expected to drive up the number of business insolvencies over the next two years.
Changes to enable debtors a fresh start while protecting creditors' rights were on the agenda of an insolvency roundtable with Attorney-General Mark Dreyfus in Sydney on Thursday.
The meeting involved leaders from the credit, finance, accounting and legal sectors as well as consumer groups to discuss how the federal government can ensure the Bankruptcy Act remains fit for purpose.
On the table were proposals for reform on the bankruptcy threshold, duration of bankruptcy, debtor rehabilitation, access to financial counsellors and regulation of untrustworthy advisers as well as longer term challenges.
The attorney-general's department is working with the Australian Financial Security Authority to develop reforms for the government's consideration.
AFSA reported this week there were 772 new personal insolvencies in January, up from 612 in December.
Of these, 414 were bankruptcies, 344 were debt agreements, and 14 were personal insolvency agreements, with the most common industries being health care, transport and retail trade.
A CreditorWatch survey released in mid-February found credit inquiries were up 129 per cent year-on-year and external administrations were expected to continue rising this year.
Court actions were at their highest point since September, up 36 per cent on January 2022.
CPA Australia told a parliamentary inquiry into the issue this week it expected a rise in insolvencies as businesses faced higher costs and interest rates and pressure from the slowing economy.
It urged businesses to manage solvency issues early with professional advice, helped to do so with government grants.