Senator the Hon Nick Sherry, Minister for Superannuation and Corporate Law, has welcomed the passage through Parliament of the Cross-Border Insolvency Act 2008 which will provide business with a streamlined approach for dealing with cases of cross-border insolvency.
'The Rudd Government places a premium on sound economic management, including controlling inflation, spending responsibly and ensuring the legal framework supports a robust and stable economy."
"The government expects the act to provide long-term benefits for Australian businesses by streamlining the process for how cross border insolvencies are handled. Insolvency laws are among the most important laws governing market conduct," Minister Sherry said.
"If insolvency proceedings are conducted efficiently, there are more assets available to distribute to creditors and less money wasted on unnecessary litigation."
The Act gives effect to the Model Law on Cross Border Insolvency developed by the United Nations. Other countries that have adopted the model law include the United Kingdom, the US, New Zealand and Japan.
Cross border insolvency is a term used to describe situations where an insolvent debtor has assets and/or creditors in more than one country, an increasingly common occurrence in a global economy. As a result of advances in telecommunications and technology, cross-border trade is no longer just the preserve of large multi-national corporations, but also for many small and medium sized businesses.
"The Act will assist in maintaining Australia's reputation as a destination for international capital flows by ensuring that investors have confidence in Australia's arrangements for dealing with cases of cross-border insolvency," Minister Sherry said.
The new Cross-Border Insolvency law will:
- Encourage co-operation between courts and insolvency practitioners of different jurisdictions
- Clarify the rights of foreign creditors to participate in Australian insolvency proceedings and
- Allow for the co-ordination of insolvency proceedings across jurisdictions