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Friday, 15 November 2002
Page: 6529

Senator LUDWIG (2:12 PM) —I move opposition amendment (7) on sheet 2676:

(7) Schedule 1, page 39 (after line 29), after item 177, insert:

177A At the end of section 237A


(3) Unless the creditors, by special resolution, agree that such of the provisions of sections 120 to 124 (inclusive) as the creditors determine do not apply to a deed of arrangement, those provisions apply, subject to such modifications and adaptations (if any) as are prescribed, to and in relation to the deed of arrangement as if:

(a) a sequestration order had been made against the debtor on the day on which he or she executed the deed; and

(b) the trustee of the deed were the official trustee.

Amendment (7) also relates to part X. When part X was developed, it was decided that the provisions of the bankruptcy law which give trustees the power to void certain antecedent transactions should not apply to forms of insolvency administration where the debtor is not divested of the whole of their property for the benefit of creditors. Therefore, the antecedent transaction provisions do not apply to deeds of arrangements or compositions. The Australian Law Reform Commission disagreed with this approach in relation to deeds of arrangement. It argued that these deeds usually deal conclusively with the debtor's affairs by providing for the full payment of debts or, if only in part, for a complete release from those debts. The commission also said that creditors who received the benefit of antecedent transactions would be inclined to vote in favour of an arrangement or an assignment.

The ALRC recommended that the antecedent transaction avoidance provisions should apply to deeds of arrangement unless expressly excluded by the deed. In 1993, the previous government endorsed this recommendation but it has not yet found its way into legislation. Labor's amendments will apply the antecedent transaction provisions to deeds of arrangement. I do not think it is necessary for me to reiterate in this debate that of course we do wait with some expectancy for the full report into part X by the government. That may deal holistically with part X—I did not want draw back to this— and we expect that report to be made public and available. Nevertheless, we think that it is still necessary to at least ensure that the antecedent transactions provided for in this amendment are worth while and should be supported, and we ask the Senate to support that amendment.