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Friday, 15 November 2002
Page: 6530


Senator ABETZ (Special Minister of State) (2:14 PM) —While I briefly outline the reasons against passing the amendment, possibly Senator Ludwig could advise why the amendment should be made to section 237A and not to section 237. It is very unclear what problem this proposed amendment is trying to address. There are sound policy reasons for excluding the operation of the clawback provisions in relation to deeds of arrangement. A deed of arrangement is in many ways the most flexible type of the part X arrangement. It is possible for the debtor to propose any means of paying his or her debts to avoid bankruptcy.

The controlling trustee is required to report to creditors on whether their interests would be better served by accepting the debtor's proposal or by the debtor's bankruptcy. Creditors can choose whether or not to accept the proposal, taking into account likely outcomes under bankruptcy, and can also resolve that the debtor become bankrupt. If the clawback provisions applied, the deed of arrangement would become more like bankruptcy and would certainly resemble a deed of assignment. It would reduce the effectiveness of part X for the many people for whom it works well. If the debtor does not provide details of assets disposed of in the two years prior to completing the statement of affairs, a creditor, the trustee or the Inspector-General may already apply to the court to overturn the deed of arrangement.