Sewell & Kettle Lawyers participates in landmark study on Voluntary Administration

  • Ben Sewell of Sewell & Kettle Lawyers contributes to research for a landmark study of Voluntary Administration in Australia – the most significant research project to date
  • Professor Jason Harris of Sydney University Law School is the only academic to seriously tackle an empirical study into Voluntary Administration
  • Ben Sewell is critical of Voluntary Administration in Australia as an instrument for restructuring of insolvent small-to-medium sized enterprises based upon his experience representing company directors and owners

Who is Professor Jason Harris?

Professor Harris is one of the most knowledgeable insolvency researchers and academics in Australia. He is a full professor and one of the two authors of the principal textbook of Insolvency Law in Australia (Keay’s Insolvency: Personal and Corporate Law and Practice).

Professor Harris has a private blog that is published at: https://australianinsolvencylaw.com

What is the study about?

As part of Professor Harris’s PhD and to mark the 25th Anniversary of Voluntary Administration he is undertaking a comprehensive empirical study into Voluntary Administration. No academic has previously undertaken the task of studying the outcomes of every Voluntary Administration over its entire 25 year history and then developed reform proposals.

Ben Sewell (Sewell & Kettle Lawyers principal) was interviewed by Professor Harris to give evidence about the efficacy of Voluntary Administration for this study. Professor Harris selected a group of 30 leading insolvency professionals to give evidence as part of this project, including Mr Sewell.

What is our view about the Voluntary Administration process?

Our view is that Voluntary Administration should be treated as a last resort for an insolvent company and that directors should be realistic about its low prospects of success. Our general guidance is that directors should carefully consider it as an instrument for a restructure before undertaking a voluntary administration (i.e. undertake careful due diligence).

The Australian Parliament recognised this in 2017 and gave directors an option of informal restructuring through the new safe harbour from insolvent trading as an alternative to Voluntary Administration. The safe harbour law was also driven by a general view that Voluntary Administration was becoming a hurdle rather than a facilitator for the rescue of economically sustainable businesses.

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