The Federal Government has decided to withdraw and revise its draft Bankruptcy Legislation Amendment Bill after intense industry and media criticism.
Aspects of the bill relating to the power of bankruptcy trustees to recover property held by third parties, including family members, came under particular fire.
Attorney-General Philip Ruddock said the purpose of the draft bill was to address issues arising from the ability of some high income earners to use bankruptcy to avoid paying debts, while maintaining their lifestyle through assets held in other entities.
“We are aware of the criticisms which have been raised since the exposure draft was released and have decided it is important to resolve these to avoid unintended consequences,” Mr Ruddock said.
Christensen Vaughan partner Lee Christensen, who specialises in insolvency, said the withdrawal of the legislation was a victory of common sense.
“It was simply reacting in a knee-jerk manner in an attempt to catch some Sydney barristers, but ended up getting the mums and dads,” he said.
“There is not much that needs to be changed in relation to transfer of assets, and the presumption that was taken away by this proposed legislation was that if solvent, you should be able to do as you wish with your assets.”