Former Australian Small Business and Family Enterprise Ombudsman Kate Carnell released the Insolvency Practices Inquiry final report, recommending a suite of recommended changes to current insolvency practices that aim to achieve the best possible outcomes for small businesses in financial trouble.
On 10 October 2019, former Ombudsman Kate Carnell launched an inquiry into the insolvency system, to investigate if current insolvency practices achieve the best possible outcome for small and family businesses in financial trouble.
Our Small Business Loans Inquiry identified a lack of transparency for the small business owner when a creditor commenced debt recovery action. The small business owners felt they had lost control of their business as they were unable to contribute to, or obtain copies of, reports by insolvency practitioners. As the cases reviewed frequently ended in the business being wound up, the process appeared poorly managed to the small business owners and resulted in less than ideal outcomes for the owner, the lender and creditors of the business.
This inquiry identifies areas where practices can be improved and recommends changes to the system to achieve fairer outcomes for all parties involved.
As part of the inquiry, a discussion paper was released to seek feedback on the development of a best practice framework for small businesses facing insolvency and for practitioners managing external administrations.