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From: nick4mony <no_reply@...>
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Subject: AFR Letter - "Creditors want fairer insolvency process"
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I've successfully submitted a letter to the AFR.
Background:
An article in the Australian Financial Review (April 28, front page) talked=
about ASIC's insolvency commissioner, Michael Dwyer, flagging some degree =
of leniency towards small/medium business who are found to have traded whil=
e insolvent. The article addressed several other issues surrounding externa=
l administration.
There was a letter from Andrew Heard (a partner in an (accounting?) firm) o=
n April 29, mainly concentrating on the high cost of external administratio=
n.
The letter, as printed:
Creditors want fairer insolvency process
As a vocal creditor of a high profile company collapse in 2002, I read with=
interest your "ASIC Leniency for business failure" (April 28). However, I =
feel, from a creditor's viewpoint, that some issues have been missed.
The main problems with the current insolvency law, for creditors, is its sh=
eer complexity, and that a deed of company arrangement is wide open to abus=
e. The perceived (and sometimes actual) lack of independence of administrat=
ors is also a serious problem.
Most crediors have never dealt with a formal insolvency before, in sharp co=
ntrast to administrators who deal with insolvency law every day. Because cr=
editors are unfamiliar with their rights, and the sheer expense of obtainin=
g professional advice, it is far too easy for administrators to pull the wo=
ol over their eyes, usually to benefit the insolvent company's directors.
One way to address concerns of independence is for the Australian Securitie=
s and Investment Commission to operate a random or round-robin allocation o=
f administrators and other insolvency practitioners to insolvency cases: th=
e directors (or major creditor) say when (and what), but ASIC decides impar=
tially (*1*) who.
We also need far better education, aimed at smaller creditors, about their =
rights, and the process of administration (or receivership, etc) and more p=
rescriptive requirements on deeds of company arrangements, to lessen opport=
unities for abuse and reduce complexity.
ASIC insolvency commissioner Michael Dwyer is clearly smart - his observati=
on of the destruction of company value upon entering external administratio=
n (also alluded to in Andrew Heard's letter, April 29) is absolutely spot-o=
n. I think that if he can also (*2*) make the process fairer, the proposed =
changes would vastly improve results for creditors and insolvent companies =
alike.
Nick Bishop, Vermont South Vic.
Apart from the minor edits ...
(*1*) two words swapped: "impartially decides"
(*2*) shortened from: "I think that if he can also use the opportunity to m=
ake the process fairer for creditors, the proposed ..."
I still think "impartially decides" is correct grammar - it's an adverb-ver=
b combination.
Conclusion:
I'm quite happy that my letter got in, more or less unmolested. I presume A=
SIC keeps an eye on these things, so hopefully I've vocalised at least some=
of the issues that creditors grapple with, and hopefully it won't be throw=
n in the "mindless/pointless complaints category".=20
I've successfully submitted a letter to the AFR. Background: An article in the Australian Financial Review (April 28, front page) talked about ASIC's...
... I think that while we've got the chance, others can also write letters, focussing on different insolvency issues. I purposely chose 2-3 core issues and...
Solar went into receivership on Monday and they are all dismissed without entitlements. By Friday some will be choosen to stay in for another 3 months...
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