Men dominating personal insolvency stats: AFSA

AFSA's latests stats on the distribution of gender in personal insolvencies

STATISTICS on gender released by the Australian Financial Security Authority (AFSA) today indicate that males continue to dominate the ranks of the insolvent.

According to AFSA, in 2014, 58% of people who entered into a personal insolvency were male, the highest proportion in this category of insolvent debtors in six years. Further:

• 54% of debt agreement debtors were male;
• 70% of personal insolvency agreement debtors were male;

AFSA also found that males are more likely than females to enter a business related personal insolvency. The proportion of debtors who entered a business related personal insolvency has increased compared to 2008:

• From 18% of male debtors in 2008 to 22% in 2014;
• From 9% of female debtors in 2008 to 13% in 2014.

The most common causes of personal insolvency were the same for both males and females in 2014. Where their insolvency was business related, most debtors of either gender attributed their personal insolvency to difficult economic circumstances.

For the detailed statistics see: Gender of Insolvent Debtors.

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Debt fossilising as Australia ages

Personal insolvency professionals will have to
develop strategies for dealing with ageing debtors

THE latest statistics on bankruptcy suggest that relatively speaking, its smooth sailing. Squalls may loom but they've yet to manifest in the numbers published this week by the Australian Financial Security Authority (AFSA).

Personal insolvencies were down in 2014/15, an overall drop of 4.2 per cent. There were 7.7 per cent fewer bankruptcies and only negligible increases in debt and personal insolvency agreements. On seeing AFSA's stats, trustees in bankruptcy would've slept untroubled by concerns about whether they have sufficient staff.

There is another issue on the insolvency horizon though, one more complex and challenging than a scarcity of appointments or uncertain economic cycles, and that is the increasing age of bankrupts and the maturing of their debts.

AFSA touched on the issue in May. In its report - Ages of bankrupts since 2008 - the regulator detailed how the "most common age" of bankrupts rose from 37 in 2008 to 43 in 2014. 

"Where we could identify the age of bankrupts .... (T)he proportion of bankrupts aged between 50 and 64 years increased from 22% in 2008 to 26% in 2014," AFSA said.

"There were increases in all age groups in this range. The largest increase was in bankrupts aged between 50 and 54 years."

From 22 per cent to 26 per cent represents an increase of 18 per cent in six years. Within this age group are many preparing for retirement. How bankrupts within this group endure their three years shackled to a trustee will contribute to trends in bankruptcy as the overall population ages.

Wily's bankruptcy portfolio no bonanza - yet

Former bankruptcy trustee
Andrew Wily.
Image courtesy ArmstrongWily

WHEN it was revealed in February this year - exclusively by SiN - that Andrew Wily was relinquishing his registration as a trustee in bankruptcy, there was speculation around how many of his active files might have to be transferred to other trustees. Opportunity was in the air.

At the time, Wily was trustee appointed to a veritable hill of bankrupt estates and word was that Nicholas Crouch, of Crouch Amirbeaggi Insolvency Accountants, would snare the lion's share. But as it turned out, only 150 or so are active.

Nicholas Crouch
Image courtesy Crouch Amirbeaggi

On February 24, 2015, 11 days after SiN broke the story, the Australian Financial Security Authority (AFSA) issued a statement confirming Wily had voluntarily offered to resign.

It also laid out a time line for concluding the process by which Wily would conclude those jobs that he could and make appropriate arrangements for the remaining appointments.

"It presently is anticipated that the Inspector-General will accept Mr Wily’s request to cease to be registered shortly after 30 May 2015. In the interim, Mr Wily is not accepting new appointments," AFSA said.

Calls to the regulator last Friday seeking to determine if the process had been concluded were not returned. A spokeswoman said in an email that AFSA "does not comment on individual bankruptcy cases". Wily did not reply to calls and emails seeking comment.

What is known is that Crouch, who referred SiN's enquiries to Wily, took about 12 jobs and a further 16 went to former Hall Chadwick partner and barrister Geoff McDonald, who told SiN the files he took on "involve some complex unfunded litigation".

Barrister Geoff McDonald
Image courtesy: Windeyer Chambers 

The questions for AFSA are: how many of Wily's jobs were finalised prior to the May 30 cut-off: how many active files have been transferred to the Official Trustee, and of those, how many might ultimately be farmed out to the profession so creditors can at least resume entertaining the expectation of some action?

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ARITA cuts Wily in the wake of AFSA deal

Andrew Wily.
Courtesy www.andrewwily.com.au

THE association of insolvency professionals has revoked Andrew Wily's membership after the armstrongWily principal cut a deal with the bankruptcy regulator that allowed him to resign as a trustee in bankruptcy, rather than having his registration terminated involuntarily.

"In accordance with clause 7.1(b)(ii) of the Constitution, Mr Wily's membership was automatically terminated effective from 24 March 2015," the Australian Restructuring, Insolvency & Turnaround Association (ARITA) said today.

"Mr Wily recently relinquished his status with the Australian Financial Security Authority as a Registered Trustee. Through its statutory role in supporting AFSA under section 155H of the Bankruptcy Act, ARITA became aware of actions being undertaken by AFSA that invoked consideration of Mr Wily's ongoing membership under clause 7.1(b)(ii) of the ARITA Constitution," ARITA said.

The relevant section of ARITA's constitution states: "If, as a consequence of Disciplinary Proceedings or legal proceedings taken against a Member, a Sanction is imposed on the Member which:

"has the effect of terminating the Member's entitlement to remain a member of a Foundation Organisation or to continue to practise as an Insolvency Practitioner or legal practitioner, then the Member's Membership is automatically terminated;".

Did Wily jump before AFSA pushed?

Andrew Wily hooked up and laughing.
Photo courtesy: Andrewwily.com.au

IN early February, Sydney-based insolvency practitioner Andrew Wily was required to front at a meeting with the Australian Financial Security Authority (AFSA).

The bankruptcy regulator had formed a three member committee under section 155(H) of the Bankruptcy Act to consider terminating Wily's registration as a trustee in bankruptcy.

Section 155(H) (1) allows for the involuntary termination of a bankruptcy trustee's registration. It empowers the Inspector-General to demand from the trustee a written explanation justifying why they should continue to be registered.

If the trustee's response either does not satisfy the Inspector-General, or is not forthcoming within a reasonable time frame, then under the Act, the Inspector-General must convene a committee "to consider whether the trustee should continue to be registered."

The reasons why the regulator might consider involuntary termination are numerous. If a trustee is incapacitated by illness or convicted of a crime then section 155(H) can be applied. If the regulator believes the trustee has failed to carry out their duties properly or exercise their powers in a suitable fashion then a demand under 155(H) can be issued. There is no suggestion that any of the above are the reason why AFSA was contemplating rescinding Wily's registration. On that point both Wily and AFSA are mute.

Whatever the reason, it was sufficiently serious for AFSA to form the committee comprising the Inspector-General, another public servant and a registered trustee with no conflict of interest. Under the Act the registered trustee must be chosen by the Australian Recovery Insolvency and Turnaround Association (ARITA).

SiN understands a trustee travelled from interstate to join the committee. It should not be inferred though that there isn't a trustee in NSW who doesn't have a conflict when it comes to the head of armstrongWily, who, as it turned out, arrived at the meeting accompanied by his lieutenant Paul Fury, another armstrongWily staffer and an alternate proposal.

Crouch poised to cherry pick portfolio

Andrew Wily showing there's more to life 

than being a bankruptcy trustee.

Photo courtesy Andrewwily.com.au

SITTING on a beach at Byron Bay, Crouch Amirbeaggi co-principal Nicholas Crouch is a long way from the worries occupying fellow insolvency practitioner Andrew Wily.

The head of armstrongWily is currently organising his voluntary retirement from life as a registered bankruptcy trustee, part of which entails working out what to do with more than 400 bankruptcy appointments prior to the deadline imposed by AFSA.

That date is described by the bankruptcy regulator in the following, somewhat flexible terms: "It presently is anticipated that the Inspector-General will accept Mr Wily’s request to cease to be registered shortly after 30 May 2015."

SiN understands about 150 of Wily's bankruptcy files are active. When contacted Crouch confirmed he'd spoken with Wily about taking over some of the jobs. However he said he "wanted to see what was in them" first and mentioned that Wily was speaking to other trustees. It's possible the pick of the portfolio might go to tender.

The most obvious way to effect the transfer of bankrupt estates to other trustees is via Section 181 of the Bankruptcy Act which states: "The creditors may, by resolution, at a meeting of which not less than 7 days' notice has been given, remove a registered trustee appointed by them, or a registered trustee who is, by virtue of subsection 156A(3), the trustee of the estate of the bankrupt concerned, and may at the same or a subsequent meeting appoint another registered trustee to be trustee in his or her place."

Another avenue might be by applying to the court for an order apportioning the jobs to specific trustees named in the application. That however would deny creditors their right to object to the nomination of a particular trustee without having to incur the cost of opposing the nomination through the courts.

None of that of course is occupying the mind of the sports-loving Crouch who - presently ensconced on the NSW far North Coast - is about as far away from Wily's woes as a Sydney-based insolvency practitioner can get, apart of course from those who've already jetted off for San Francisco for the INSOL Conference, which kicks off next Sunday.

See also EXCLUSIVE: Wily relinquishes bankruptcy ticket

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AFSA and ASIC renew MOU

Veronique Ingram
Photo: AFSA 

AFTER 12 years ASIC and AFSA have renewed their vows, signing a memorandum of understanding (MOU) that replaces a previous arrangement entered into by the regulators of corporate and personal insolvency in April 2002.

The new MOU is designed to facilitate the exchange of information and ensure appropriate referral of relevant matters between the two agencies.

It is also intended to promote cooperation in the areas of compliance, education and enforcement by obliging the regulators to share information when it would make sense to do so and allows for the establishment of  joint task forces when and where appropriate.

In promoting a spirit of cooperation one would’ve thought should have already existed, the MOU requires that ASIC and AFSA liaise in regards to operational and policy matters, liaising being defined for the purposes of the MOU as, among other things, a minimum two meetings a year.

ASIC's John Price
Photo: Flickr

Like a good pre-nup the new MOU’s goals are judiciously curtailed by indistinct and ambivalent legalese, best exemplified by the phrases “best endeavours”, “where appropriate” and “subject to each agency’s obligations at law”.

The new MOU came into effect on September 30, 2014 and is signed by the Inspector General in Bankruptcy Veronique Ingram and ASIC Commissioner John Price. See for yourself: MOU between AFSA and ASIC - September 2014

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