Budget 2022: Proposed reforms to simplify the insolvency regime

The Morrison government says it is committed to “further simplify and streamline” Australia’s insolvency regime, with three (3) key areas of focus in the federal budget and plans to spend $29.8 million over four (4) years, from 2022-23, on insolvency reforms. 

The key areas earmarked include: 

  • Plans to spend $7 million “to clarify the treatment of trusts with corporate trustees” pursuant to insolvency laws; 
  • A budget of $22 million to change Australia’s unfair preference rules from July 2023; and
  • The government says it will spend $800,000 to implement its response to the recent review of safe harbour provisions.


The proposed reform to unfair preference claims by Liquidators would mean that transactions that either amount to less than $30,000 or are made more than three (3) months prior to the company entering external administration will no longer be able to be clawed back, provided those transactions involve unrelated creditors and are within the ordinary course of business.

The treatment of trusts with corporate trustees will hopefully mean that the “framework will allow for great efficiency of the external administration of corporate trusts, ultimately supporting better outcomes for distressed companies and their creditors” said Assistant Treasure Michael Sukkar.

These reforms will not happen overnight, but Hamilton Murphy Advisory are anticipating that with much needed industry consultation, these proposed law reforms will be a step forward in simplifying at least a few areas of the complex insolvency regime.

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