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An insolvency regime is a necessary part of the legal system in a capitalist economy. It is a means for dealing with businesses that fail, and individuals who cannot pay their debts. An insolvency regime is required to ensure that in those circumstances the remaining assets are equitably distributed amongst the creditors, the affairs of the insolvent business or individual are administered in a fair and orderly fashion, businesses and individuals are rehabilitated to the extent possible, and that any wrongdoing is investigated and punished.
Insolvency Law can help the wider economy by ensuring that resources and people are reallocated to more productive activities. To ensure equitable distribution of assets and to prevent abuses of the insolvency system to avoid paying legitimate creditors, liquidators and trustees in bankruptcy are given powers to pursue and enforce claims for assets and compensation and to undo past transactions. Insolvency Law will be particularly important in the 2020s due to the economic downturn in Australia and overseas caused by the COVID 19 pandemic.
Insolvencies often raise legal, practical and theoretical questions of considerable interest, which are by no means confined to a narrow concept of "insolvency" itself. Consequently, insolvency lawyers require knowledge of many other areas of public and private law, including equity and trusts, corporations law, contract, property and securities law and constitutional and administrative law.
This subject involves a practical and theoretical examination of the law of personal insolvency (i.e. bankruptcy), and corporate insolvency. In terms of the practical law, the subject will cover the process and outcomes of placing individuals and companies under the various forms of insolvency administration under the Bankruptcy Act 1966 and the Corporations Act 2001.
While the subject concentrates on the law currently applicable in Australia, opportunities are provided to students to reflect on the international context. Foreign insolvency regimes may be considered by students in a research essay, both to illustrate the content and operation of the Australian insolvency system and to explain how a transnational insolvency is administered and regulated.
The examination of the practical aspects of the law will be integrated with the economic and social policy objectives of the applicable laws. This will involve critical reflection on the conflicting demands of different stakeholders in an insolvency. Thus, an examination of the national and international scholarship dealing with policy objectives in the context of the current domestic and international law of insolvency will be an important part of the subject. As well as discussing what the law is, students will be expected to research and consider proposed alternatives, and examine critically why the law is as it is and what it should be. International and local reform proposals will be examined to demonstrate different ways of achieving the social and economic objectives of an insolvency system.
Students will be expected to form and justify independent opinions on the strengths and weaknesses of current laws and proposed reforms, and to develop, where appropriate, other options.
Intended learning outcomes
A student who has successfully completed this subject should have:
a specialised and integrated understanding of, and be able to independently and critically analyse:
- the nature and operation of the regimes for personal and corporate insolvency presently operating in Australia.
- the law and practice of personal and corporate insolvency in Australia.
- practical and theoretical problems arising in insolvencies and how they might be solved.
- insolvency law in its economic, social and political context from perspectives including those of debtors, creditors, employees, business-people, company shareholders and officers, insolvency practitioners, members of the public and governments.
Students should also be able to:
- conduct independent legal research at an advanced level in the area of insolvency law.
- both evaluate and generate critical perspectives to understand and reflect on a range of texts including statutes, cases, specialised academic commentary and complex government reports.
- create and expound in depth legal analyses and arguments to discuss hypothetical practical fact scenarios relating to insolvency.
- respond to sophisticated policy and theoretical questions relating to insolvency law, including comparative insolvency law.
- communicate complex ideas relating to reforms and proposed reforms of Australian and overseas insolvency law in the context of domestic and international reform proposals.
Students who have successfully completed this subject will have developed cognitive, technical and creative skills in:
- Understanding and reasoning about the processes whereby social and economic policy objectives are translated into statutory and other law.
- Applying knowledge gained in Corporations Law and Insolvency Law to analyse and discuss practical and theoretical legal problems.
- Evaluating the extent to which legislation and case law achieves acceptable social and economic policy outcomes (including a consideration of what these outcomes should be), and suggesting and designing improvements to the legal system.
- Comparing and contrasting the current operation of the Australian legal system with other past and present legal systems.
- Analysing complex legal problems involving the interaction of statute and case law, giving a concise statement of the effect of the relevant law, and applying it to given factual situations.
Last updated: 18 December 2020