In the flurry of excitement over the innovation statement earlier this month, proposed changes to insolvency laws scored almost no attention. Yet they will dramatically change the landscape for both large and small companies in financial difficulty.
By cherrypicking elements of Chapter 11 laws while avoiding hugely expensive bankruptcy court based resolutions, the Australian rules will move part-way towards a US system that encourages rehabilitation and workouts of failing companies.
Legal experts say the changes could reshape business culture in Australia by enabling directors to get restructuring advice earlier and potentially avoid a company going into voluntary administration.
The critical change relates to the personal liability …