January 2018 – New 2018 Bankruptcy Laws are set to reduce the period of bankruptcy from three years to one. The disqualification period for holding the position as a director and acting in certain professions are also reduced.
There are many other changes trying to strike the right balance between the interests of debtors and creditors. The bottom line is that the changes do not bode well for creditors seeking to recover monies either through the Courts or by bankruptcy.
Soon the threat of “bankruptcy” will no longer be a tool in the debt recovery tool box – the analogy of the toothless tiger springs to mind. The Government anticipates a culture of “innovation” with significant interest in new starts-ups.
The removal of the threat of bankruptcy and the stigma that comes with it, means creditors will need to take additional steps to protect their interests against bad debts, including but not limited to factors such as taking security, extending personal guarantees and indemnities, if appropriate – ensuring you have a registerable interest in land, and that all PPSR interests are registered, to name a few.
18 December 2017