A parliamentary committee has delivered a damning review of Australia’s insolvency system, calling for an independent and comprehensive review that addresses the system as a whole. The Parliamentary Joint Committee on Corporations and Financial Services released its report this week, Corporate Insolvency in Australia, saying the system is overly complex, difficult to assess and creates unnecessary cost and confusion for both debtors and creditors. The report said: “Few parties seem satisfied with the system as it stands. Unsecured creditors are frustrated by low returns in insolvency proceedings. “Debtors, particularly small businesses, believe opportunities for restructuring are lacking. System costs are excessive.” The committee found that reforms to the system over the years have been worthwhile and sensible but the approach has been piecemeal, with reforms attending to parts of the system without having regard to the whole. This has added to the complexity and, in places, inconsistency of the system. Problems arising from this include the extent of insolvent trading and a lack of enforcement n response. While the committee has called for a comprehensive review, it has identified some matters that should be dealt with now. These include simplifying the small business restructuring pathway, changing the eligibility requirements for registered liquidators, better regulation of pre-insolvency advisers and improving the insolvency process for trusts. The committee would also like to see ASIC improve the collection and analysis of the data it collects to improve the visibility of companies in the system. The committee also recommended that a comprehensive review considers harmonising the corporate and personal insolvency systems, noting that “whether the insolvency process of a business is governed by the personal or corporate insolvency regime depends on the legal form of that business, rather than its economic form”. The unification of insolvency law under a single insolvency regulator would potentially deliver significant benefits.