Surge in Insolvency Practices Inquiry responses
The recently announced Insolvency Practices Inquiry is surging ahead, following an enormous response from the small business sector.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Kate Carnell revealed that submissions have been flowing in since the Insolvency Practices Inquiry was launched two weeks ago.
“My office has already received 113 survey responses and a number of submissions in relation to this inquiry and we expect that number to grow,” Carnell said.
“While we are still in the early stages of the inquiry, it’s clear there’s a groundswell of public support for the work we are doing in this area.”
Insolvency Practices Inquiry
Launched earlier this month, the Insolvency Practices Inquiry aims to investigate the practices involved in the insolvency procedure. The inquiry came after several industry bodies expressed concern that the current process provides little chance for recovery for small businesses under financial strain.
“Primarily the Insolvency Practices Inquiry will shine a light on the insolvency system and uncover if it encourages practitioners, in the first instance, to restructure the small or family business to turn it around,” Carnell said.
“We will also look at the transparency and fairness of the current system.”
Carnell suggested that the Insolvency Practices Inquiry was the first step in reviewing the current procedure, ensuring that small businesses have the best opportunity to continue trading.
“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,” she said.
“Few small businesses that enter formal insolvency administration are able to navigate their way through the process to reach a restructuring agreement.”
Submissions and outcomes
The ASBFEO is currently seeking submissions from the small business sector, in particular those that have undergone insolvency proceedings.
“We remain very keen to hear from small and family businesses that have faced financial difficulties and restructured or wound up their business,” Carnell said.
“Many small businesses that have faced difficulties, felt they lost control of their business and in cases where the business was ultimately wound up, they felt the process was poorly managed.
“This inquiry will identify areas where practices can be improved. I will also recommend changes to the system to achieve a fairer outcome for all parties involved.”
An interim report will be released in December with a final report to be handed down in February.