Book Review: Australian Insolvency Law

“In 2008 and 2009 the world’s financial systems have unravelled in what is now known as the Global Financial Crisis.  As a result, the economies of every developed nation in the world have suffered with corporate collapses and tales of personal financial distress.

Never has a book such as this been more timely or topical.”

These words, taken from the cover of Australian Insolvency Law by Symes and Duns, have certainly rung true in Australia in recent times.  The past few years have witnessed the collapse of a number of sizeable businesses.  To name but a few, the list includes: ABC Learning Centres, margin lenders such as Opes Prime and Lift Capital, the tax driven agricultural schemes run by Timbercorp and Great Southern, the Raptis property group, Storm Financial, upmarket retailer Herringbone, MFS/Octaviar’s funds management business and the financial services business run by Allco Finance Group.

In this context, Australian Insolvency Law, aimed at undergraduates seeking to further their “basic framework of knowledge,” is a welcome and well timed addition to the insolvency landscape.  

The text addresses both personal as well as corporate insolvency and includes separate chapters on each of the main corporate insolvency procedures — Receivership, Voluntary Administration, Deeds of Company Arrangement and Liquidation.  These chapters provide an overview of the procedure associated with each of these regimes together with the powers and responsibilities of insolvency office holders.  Some of the issues commonly encountered during these insolvency procedures are also considered.  In addition, personal insolvency is addressed at length, including a chapter dedicated to the alternatives to bankruptcy.  Naturally, as it is aimed at students, practitioners may find that the text does not address specific issues in sufficient detail for some advisory work.

Helpfully, the text also includes a separate chapter on the growing area of cross-border insolvency law.  In this context, with the globalisation of business, it is not uncommon for large multi-national groups to have companies, businesses, assets or creditors located in a number of jurisdictions.  This chapter focuses on the international efforts to streamline the insolvency of such groups through the adoption of the Model Law on Cross-Border Insolvency formulated by UNCITRAL (the United Nations Committee on International Trade Law), as enacted in Australia in the Cross-Border Insolvency Act 2008 (Cth).  The importance of the issues addressed in this chapter was stressed by Chief Justice Spigelman of the New South Wales Supreme Court at the Insol International Annual Conference in Shanghai in September 2008:

In the contemporary global economy, in which corporations engage in transnational investments and contracts to an extent that is unprecedented in human history, the way in which those involved in insolvency conduct their affairs is of critical economic significance.  The task of all of us, whether lawyers, judges, administrators, accountants or other independent professionals, is to ensure the orderly, efficient and cost effective reorganisation or winding-up of a corporation, in a manner which reverses improper disposition of assets or preferences and avoids wasteful litigation, unnecessary expense and excessive delay.

The Global Financial Crisis has certainly put insolvency law back into the spotlight.  It is significant that the past few years have seen the Courts deliver a number of decisions relating to corporate collapses from previous downturns, including Justice Owen’s judgment in Bell v Westpac¹ stemming from the demise of Alan Bond’s empire, along with other decisions, many are of which are discussed in the text, arising from litigation involving such companies as Ansett, HIH and One.Tel.

Australian Insolvency Law notes² that this increased activity and attention will no doubt see further development of insolvency law in the next decade from both the legislature and the common law.

In summary, Australian Insolvency Law is a well written text which is good value at $115 direct from the publisher.  Although primarily a text for students, it will be found useful to many barristers in practice.  However, as the text is aimed at an introductory level, it may not address some issues in sufficient detail for advisory work.  In this context, for those who practice in the area regularly, it would serve as a useful adjunct to other more detailed texts on the market.

Dan Butler

Footnotes

1. Bell v Westpac [No 9] [2008] WASC 239.
2. At page 3.