Corporations Amendment (Corporate Insolvency Reforms) Bill 2020 - Submission - Small Business Restructure Practitioner and other matters

Sep 4, 2026

Submission argues that Australian small-business insolvencies during the Covid-19 period stem not from poor management competence but from government restrictions, creating a need for timely restructuring support to protect stakeholders. The draft proposal appoints Small Business Restructure Practitioners but limits roles to licensed liquidators, which the submission criticizes due to conflicts of interest and insufficient breadth of restructuring skills. It recommends expanding practitioner eligibility to business and commerce graduates and restricting referrals to liquidators only when consensus fails or closure is unavoidable, alongside safeguards for owners’ personal assets.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages9

Reading Time23 min

AccessFree to download

Summary

Recommended eligibility and referral conditions

Introduction

Causes of insolvency under Covid-19

Limits of existing support and emerging risks

Critique of restricting roles to licensed liquidators

Corporations Amendment (Corporate Insolvency Reforms) Bill 2020 (c2020-118203) Submission Small Business Restructure Practitioner and other matters 201012 Dr Karin C Mogg BVSc PhD MBA Data analyst, Researcher and Writer. Summary We face a unique situation in Australia where large-scale insolvencies are occurring in Australian small businesses not because of a lack of competence of business management but because of the restrictions imposed by governments in an attempt to control the Covid 19 pandemic. In this situation, small businesses need the opportunity and support torestructure and adapt, or close before the effects on their stakeholders become too severe. The draft legislation proposes the appointment of Small Business Restructure Practitioners to perform this function. However, it stipulates that only licensed liquidators may perform this role. Experience and research in the USA and UK has demonstrated that a broad set of business skills is required for Small Business Restructure Practitioners to effectively restructure both the business and its debts to produce positive survival outcomes for the business. Given the skill sets required, licensed liquidators and accountants are insufficiently qualified to conduct restructuring for positive business outcomes. Liquidators have a conflict of interest. They derive their profit from liquidating businesses, not from ensuring their survival. The current proposal would enable licensed liquidators to charge the $20,000 restructure fee and use it as an opportunity to scope out which businesses would bring them the greatest profit if liquidated. Personal experience and reports of other small business owners shows that even before the Covid 19 crisis, licenced liquidators were pillaging small businesses in distress in a manner equating to piracy. Presenting them with a tsunami of businesses in distress can only result in large-scale, government-sanctioned piracy and an ensuing, massive Public Relations scandal. With a prediction of up to 25% of Australian small businesses facing insolvency as a result of Covid 19 restrictions, the number of licensed liquidators is not sufficient to deal with the load. Under the current proposals, affected small businesses would be denied the care and support that they need to navigate this crisis. It is therefore recommended that the registration of Small Business Restructure Practitioners include experienced Business and Commerce graduates (Bachelors and Masters qualifications) and that the Small Business Restructure Practitioners only refer businesses to licensed liquidators when consensus on a restructuring plan for the business cannot be achieved and closure of the business by the owner is not feasible. Further recommendations are made regarding the administration of the program and the importance of protecting the personal assets of the small business owners who find themselves in this situation as a result of government decisions beyond their control or reasonable ability to predict. Introduction Traditionally, the main reason for failure of a business was deemed to be poor management (1) . However, small businesses in Australia are being subjected to events beyond their control that have adversely affected the viability of their business and are precipitating insolvency. The most notable of these are the restrictions associated with the Covid 19 pandemic. Businesses in the hospitality sector have been deprived of customers and revenue. Businesses in the service and tourism sectors have been subjected to limitations in customer numbers that significantly reduce business revenue. Other businesses are suffering the flow-on effects of Covid 19 pandemic and/or restrictions in the USA, Europe and Asia. Although businesses have been supported in the retention of their employees and key participants by the JobKeeper package, JobKeeper is being reduced and is planned to be phased out in March 2021 despite the likelihood

FAQs

What does the submission identify as the main driver of small-business insolvency in Australia during Covid-19?

It argues insolvency is driven by restrictions imposed to control the Covid-19 pandemic rather than by lack of competence in business management.

Why does the submission oppose limiting Small Business Restructure Practitioner roles to licensed liquidators?

It cites a conflict of interest—profits derived from liquidating businesses—and claims liquidators and accountants lack sufficiently broad skills for restructuring that improves survival outcomes.

What is the key recommendation for who should be eligible to register as a Small Business Restructure Practitioner?

The submission recommends including experienced Business and Commerce graduates (bachelor’s and master’s qualifications) as practitioners, and limiting referrals to licensed liquidators to cases where restructuring-plan consensus cannot be achieved or closure is not feasible.

Sep 4, 2026

Uploaded by Chloe Bennett