Treasury ‘National Innovation and Science Agenda – Improving bankruptcy and insolvency laws’
While we would prefer to see a more significant modification of insolvent trading laws, the Committees strongly support Model B.
We prefer Model B over Model A, due to the need to increase the confidence of boards and to encourage them to take good faith steps to restructure companies. We think the proposed “carve out” will be a simpler way to address the issue and will instill more confidence than a defence, because it minimises the likelihood of litigation and calls upon insurance policies.
We recommend that some aspects of Model A be incorporated into either regulations or regulatory guidance relating to Model B to clarify the meaning of “reasonable steps” and to require the appointment of a registered restructuring advisor.