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Thursday, 20 September 2007
Page: 1


Mr PEARCE (Parliamentary Secretary to the Treasurer) (9:01 AM) —I move:

That this bill be now read a second time.

The Cross-Border Insolvency Bill 2007 gives effect to the model law on cross-border insolvency adopted by the United Nations Commission on International Trade Law. Adoption of the model law will improve the efficiency and effectiveness with which Australia’s laws deal with cross-border insolvency.

‘Cross-border insolvency’ is a term used to describe the circumstances in which an insolvent debtor has assets or creditors in more than one country. Many businesses have interests stretching beyond their home jurisdictions. Firms are increasingly organising their activities on a global scale. With the advent of sophisticated communications and information technology, cross-border trade is no longer the exclusive preserve of large multinational corporations.

With businesses increasingly having assets, creditors and employees in a number of countries, it is important that laws are in place to deal with the circumstances that arise when such businesses fail. The bill provides for cooperation and coordination between courts with respect to insolvency proceedings that may occur in several countries simultaneously with respect to a debtor.

Debtors with assets or creditors in more than one jurisdiction may not necessarily be incorporated. It can be equally important for cooperation and coordination to occur between jurisdictions with respect to individual debtors as it is for corporate debtors. Accordingly, the bill will also apply the model law to cross-border bankruptcy proceedings.

The bill delivers three key reforms. First, it will ensure that there is no discrimination between foreign and domestic creditors in Australian insolvency proceedings. Second, where there is a foreign insolvency proceeding involving assets in Australia, it will provide the foreign administrator with direct access to assistance from Australian courts. And, third, where there is a foreign insolvency proceeding and a local insolvency proceeding, it will provide for the courts to cooperate with the goals of maximising the value of the debtor’s worldwide assets, protecting the rights of debtors and creditors and furthering the just administration of the proceedings.

The bill will also align Australian law dealing with cross-border insolvency with that of our major trading partners, many of which have already adopted the model law on cross-border insolvency. These include Japan, the United Kingdom and the United States.

In conclusion, I note that the current bill has been developed after extensive consultation. The government appreciates the assistance of the members of the Insolvency Law Advisory Group and the Insolvency Practitioners Association of Australia in the preparation of the bill. I commend the bill to the House.

Debate (on motion by Mr Edwards) adjourned.