Karen O’Flynn
The government’s new approach to insolvency is long on rhetoric about “risk-taking” and the need to remove the “stigma” of business failure. It is short on detailed consideration of exactly why we have legal rules for corporate and personal insolvency.
Those rules aim to balance the interests of creditors against the need to encourage business start-ups. There is no objective evidence that the current system is slanted too heavily against entrepreneurs. For every trade creditor of a failed business who receives more than 50¢ in the dollar, there are hundreds, if not thousands, who see only a tiny fraction of that. The government’s proposal to allow companies to trade whil…
Read the full article at: http://www.afr.com/opinion/letters-to-the-editor/new-dangers-in-safeharbour-rules-20151212-glm9aw