Australia and the International Insolvency Paradigm

Australia’s response to international insolvency is the Cross-Border Insolvency Act 2008 (Cth), which implements the UNCITRAL Model Law on CrossBorder Insolvency. The Act is designed to facilitate international trade and investment by improving the administration of cross-border insolvency cases, including the recovery of assets located overseas. However, the Act is not a comprehensive international insolvency statute. Apart from the ubiquitous and overarching common law and the Cross-Border Insolvency Act, Australian law relevant to cross-border insolvency includes the Corporations Act 2001 (Cth) ss 580–81, s 583 and s 601CL (the ancillary liquidation provision). Currently, the procedures overlap in a complex and confusing way, with cases potentially falling through gaps in the law and important provisions being overlooked. The end result for the administration of cross-border insolvency cases is incongruity and inconvenience, with added cost and complication. The time has come for a rethink and redesign of Australia’s international insolvency framework. The revised framework should include reconceptualisation of the basis for international insolvency cooperation, with incorporation of the Model Law standards as the basic threshold for insolvency assistance and provision for enhanced cooperation and assistance in certain circumstances. The conceptual redesign should also tackle some of the current limitations of the Cross-Border Insolvency Act.