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Client Update: Insolvency – 15 February 2008

Cross-Border Insolvency Bill reintroduced into Parliament

In brief: Draft legislation to incorporate the UNCITRAL Model Law on Cross-Border Insolvency into Australian law, first introduced in September 2007 by the previous Federal Government, has been reintroduced into Parliament by the newly appointed Minister for Superannuation and Corporate Law as a new Senate Bill. Partner Paul Nicols (view CV) and Senior Associate Michael Popkin report.

In September 2007, we reported that the Cross-Border Insolvency Bill 2007 had been introduced into Federal Parliament. The Bill's purpose was to give effect to the Model Law on Cross-Border Insolvency developed by the United Nations Commission on International Trade Law (UNCITRAL). That Bill was subsequently passed by the House of Representatives but lapsed with all other pending legislation when Parliament was prorogued in anticipation of the 24 November 2007 federal election.

However, far from being dead, on 12 February 2008, the first day of the sitting of the new Senate, the Minister for Superannuation and Corporate Law, Senator Nick Sherry, gave notice of his intention to reintroduce the Bill as the Cross-Border Insolvency Bill 2008, which he did on 13 February 2008.

It is significant that the Bill has now been reintroduced, unchanged, by the newly elected government as one of the first pieces of legislation to be considered by Parliament. This indicates that the Bill will be enacted swiftly and, we expect, without significant opposition.

The content of the Bill is unchanged from that described in our September 2007 Focus: Insolvency article. Its purpose is to provide effective and efficient mechanisms for dealing with cases of cross-border insolvency by:

  • encouraging cooperation between courts and insolvency practitioners of different jurisdictions;
  • clarifying the rights of foreign creditors to participate in Australian insolvency proceedings; and
  • allowing for the coordination of insolvency proceedings across jurisdictions.

Once enacted, Australian law on cross-border insolvency will be brought into line with that of many of Australia's major trading partners who have already adopted the UNCITRAL Model Law, including Japan, the United Kingdom and the United States.

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