Efficiency and Certainty in Decision-Making: An Evaluation of the Insolvency Practitioner Disciplinary Committees

Abstract

The increase in rates of company failures and personal bankruptcy within the current economic climate warrants an assessment of the framework governing the conduct of the insolvency practitioners who administer them. Historically, trust and confidence in registered liquidators and trustees in bankruptcy has been impacted by concerns of widespread misconduct in the profession as discussed by the media and in the Australian Parliament. Providing evidence about this issue, which has been exceedingly scarce in academic literature, is in the public interest where financially distressed consumers are vulnerable to seeking the alternate services of untrustworthy insolvency advisers (otherwise known as ‘debt vultures’). The Insolvency Law Reform Act 2016 (Cth) introduced a new regulatory regime for insolvency practitioners; specifically, the introduction of pt 2 disciplinary committees in corporate insolvency and bankruptcy (‘disciplinary committees’). Matters referred to the disciplinary committees are deemed to be the most serious by the insolvency regulators. In this article, I examine the totality of cases that have been published by the committees from the commencement of the regime on 1 March 2017 to 1 March 2025, including critically evaluating how they identify and weigh factors to determine appropriate orders. I seek to provide answers to the questions of whether the committees are achieving their intended legislative objectives to be efficient and resolve misconduct matters in a timely manner, and whether there is certainty in their decision-making. Overall, my research found that there continues to be a small number of matters appearing before disciplinary committees.