- The new Bankruptcy Regulations 2021 (Cth) (Incoming Regulations) commenced on 1 April 2021.
- The Regulations substantively update the Bankruptcy Regulations 1966 (Cth) (Sunsetting Regulations), modernising its formatting and structure.
- The replacement will require Insolvency Practitioners to familiarise themselves with the Incoming Regulations and update their procedures, precedents and training to reflect the Incoming Regulations.
What is the function of the Incoming Regulations?
The Incoming Regulations commenced on 1 April 2021. This new version features a complete reformatting of the Sunsetting Regulations, containing a range of amendments that received a mixed response from the insolvency industry during the submissions period.
What are the changes?
The new amendments focus on modernising references and ensuring the Regulations are more clearly aligned with the Act, namely:
- significant rewording of existing provisions has been undertaken to reflect changes to the Parliamentary Counsel drafting practices and clarify known areas of confusion;
- deadline provisions will now be defined in business days rather than calendar days;
- references to outdated definitions or repealed legislation have been removed;
- a new and simplified numbering system for provisions has been introduced;
- the list of exempt household property has been modernised, reflecting more current everyday essential assets; and
- the prescribed methods of transmitting information and services has been updated to allow the use of email and other modern telecommunications alongside traditional post and facsimile.
The Australian Restructuring Insolvency & Turnaround Association has raised concerns about the impact these amendments could have on the future interpretation of provisions and the precedents established by the Courts. In addition to this, the Incoming Regulations dispose with the numbering system of the Sunsetting Regulations, which ARITA strongly recommended against in their feedback and review of the final Regulations. The Sunsetting Regulations format was similar to the Act and consistent with the Corporations Act 2001 (Cth), a form many Insolvency Practitioners preferred, as outlined in their respective submissions. The result of this particular change will require practitioners to familiarise themselves with the new framework in order to efficiently navigate the Incoming Regulations.
What does this mean for Insolvency Practitioners?
Insolvency Practitioners must familiarise themselves with the new format of the Incoming Regulations, as the numbering is substantially altered. Additionally, past precedents will refer to the Sunsetting Regulations, which may or may not substantially align with the law in the new regulations.
As the Incoming Regulations commenced on 1 April 2021, Insolvency Practitioners should familiarise themselves sufficiently to avoid providing advice and services that are informed by provisions contained in the Sunsetting Regulations. For example, substantial changes to provisions such as an increase to the minimum statutory amount for bringing bankruptcy proceedings, require the attention of Insolvency Practitioners when updating their bankruptcy procedures. As many consultation submissions noted, even minor amendments to provisions within the Incoming Regulations have the potential to change their meaning for the purpose of both existing precedents and judicial interpretation.