Changes to the rules governing bankrupt companies will reform Australia's outdated and inadequate insolvency laws, the peak insolvency association said.
The Corporate Amendment (Insolvency) Bill 2007, the first major change to the legislation in 13 years, will offer greater protection to employees and reduce cost to creditors, President of the Insolvency Practitioners Association of Australia (IPPA) John Melluish said.
"These reforms will offer more protection to those who really need it, people who would otherwise unfairly lose out," Mr Melluish said.
He said the changes are long overdue and are a result of parliamentary inquiries over the past seven years following the collapse of Ansett and HIH.
The reforms will automatically protect employee superannuation and other entitlements.
The assets of related companies will be pooled, cutting down administration costs and making it easier to trace assets.
The collapse of Ansett and Westpoint are two examples where costs could have been reduced if the reforms had been in place, Melluish said.
"Ansett's many subsidiaries and Westpoint's complex structure added an enormous burden, and the cost to the process may have been greatly reduced if they could have been pooled."
Other changes include a requirement that registered liquidators obtain professional indemnity and fidelity insurance.
ASIC will have the power to seek a court review of the remuneration of administrators. Documents will be allowed to be sent electronically to creditors.
The IPAA is calling for more reforms such as being allowed to advertise on the internet.
