Replacement Explanatory Memorandum(Circulated by authority of the Attorney-General, the Hon Christian Porter MP)
1. This Bill amends the Bankruptcy Act 1966 .
2. The Bill will effect a comprehensive reform of Australia's debt agreement system. Debt agreements are an increasingly popular alternative to bankruptcy. Between 2007 and 2016, new debt agreements increased from 6,560 to 12,640 per year. Over the same period, new bankruptcies declined from 25,754 to 16,842 per year. As a result, the commercial debt agreement administrator industry now performs a significant financial advising function, including in relation to people in financially vulnerable circumstances. Consequently, debtors, creditors and the public should have reason to place trust and confidence in the debt agreement system.
3. Significant measures in the Bill make provision for:
- the types of practitioners authorised to be debt agreement administrators
- registration, deregistration and the obligations of debt agreement administrators
- formation, administration, variation and termination of debt agreements
- protections against debt agreements that cause financial hardship or have other defects, and
- powers of the Inspector-General in Bankruptcy (Inspector-General) with respect to debt agreements and debt agreement administrators.
4. It is intended that the measures in the Bill will boost confidence in the professionalism of administrators, deter unscrupulous practices, enhance transparency between the administrator and stakeholders, and ensure that the debt agreement system is accessible and equitable.
DATE OF EFFECT
5. The majority of amendments in the Bill will commence six months after Royal Assent. This will give debt agreement administrators and AFSA time to prepare for commencement of the reforms.
6. The Bill will have no direct financial impact.
7. The following abbreviations are used throughout this explanatory memorandum.
|AFSA||The Australian Financial Security Authority|
|Amending Act||Bankruptcy Amendment (Debt Agreement Reform) Act 2018|
|Bankruptcy Act||Bankruptcy Act 1966|
|Bankruptcy Regulations||Bankruptcy Regulations 1996|
|Bill||Bankruptcy Amendment (Debt Agreement Reform) Bill 2018|
|Practice Rules||Insolvency Practice Rules (Bankruptcy) 2016|