The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, has announced a package of reforms to Australia’s corporate insolvency laws consisting of:

• reform of insolvency administrations which will include the adoption of substantially all of the recommendations made by CAMAC in its Issues in external administration report;
• amendment of the Corporations Act to reverse the effect of the High Court’s decision in Sons of Gwalia v Margaretic which determined that, in a corporate winding up, certain compensation claims by shareholders against the company were not subordinated below the claims of other creditors;
• a discussion paper on the operation of Australia’s insolvent trading laws in the context of attempts at business rescue outside of external administration (”safe harbour”). The paper discusses three possible options: to maintain the status quo; to adopt a modified business judgement rule in respect of the director’s duty to avoid insolvent trading; and to adopt a mechanism for invoking a moratorium from the insolvent trading prohibition while work-outs are attempted. Submissions close on 2 March 2010.

Further details are available from Australian Regulatory Compliance Review.