Figures released by ITSA for the period 2007/2008 provisionally indicate that total personal insolvency activity continues to increase and during that period it grew by 2.9% to 32,909. New bankruptcies in the June 2008 quarter numbered 7,058. In comparison there was an increase in Part IX debt agreements of 1.6% but during the quarter June 2008 a noticeable increase of 2.4%. The intent of the Australian Government to diminish the number of bankruptcies by the introduction of the Part IX regime appears to have failed having regard for these statistics or alternatively this growth in bankruptcies may be attributable to a lack of faith in the Part IX regime voiced by consumer groups to the public at large.
The industry comprising debt agreement administrators as a whole has been extensively criticised over the years and if its major critics could be relied upon it has been an industry perceived as bereft of the basic instinct of commercial morality. Those who have committed offences both perceived and real have brought disrepute to the industry and as occurs so often the few have branded the many.
It is this essay’s view that the introduction of Part IX was poorly conceived the legislation poorly drafted and although the concept was one of social justice and a reduction in bankruptcy filings; the latter has failed. But, in the absence of well considered and well drafted legislation it is not reasonable to later point a finger at those who commence business based on availability of process. It is reasonable however to expect that those engaged in insolvency practices will engage it in an ethical and moral manner.
In September 2005 a total of thirty eight individuals and corporations operated as debt agreement administrators. The number currently stands at twenty seven and that includes three registered trustees. By 30 June 2009 that number may again be diminished by operators exiting the industry but this may a good omen as it will leave those in the industry who are legitimate and prepared to meet the challenges legally, morally and ethically.
The Bankruptcy Legislation Amendment (Debt Agreements) Act 2007 was long overdue and may prove to be a cadre from which the damage done can be repaired. Further regulatory steps need to be taken to either rein in or discard broker participation in the process. Indeed it is these peripheral advisors who must bear responsibility for many of the systems past failings.
As administrators exit the industry or are for other reasons deregistered new entrants will emerge to replace them. It will be the second generation administrators, cognizant of the law and professional standards who will take upon themselves the task of relinquishing previous behavior. As this occurs it would be advantageous to seek admission, as a group of professionals, to the Insolvency Practitioners Association.
Debt Management Advice
5/01/10