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- Published: June 13, 2017
- Category: Latest News
Proposed changes to Australia’s insolvency laws are bringing the role of “restructuring officer” into the spotlight. But there are concerns around the qualifications and definition of what this role entails.
In the United States and Europe, it’s common for companies facing an economic “zone of uncertainty” to hire a chief restructuring officer to deal with the situation. A restructuring officer is able to renegotiate all aspects of an organisation’s finances in order to deal with an upcoming bankruptcy or to restructure the organisation following a bankruptcy filing.
But while introducing a restructuring officer can be a positive development for troubled companies, Jirsch Sutherland Partner Andrew Spring says within Australia there is uncertainty around the role.
“The concept of a restructuring officer is a good one,” says Andrew. “A company’s directors and managers may not be in the best position to help manage a business through financially turbulent times, which means an independent party may be the better alternative.”
Andrew’s concerns centre on the proposed new insolvency laws where neither the role nor qualifications of a restructuring officer have been defined. [See: How the new insolvency laws help directors]
This is especially troubling, he says, as appointing a restructuring officer is one of the first acts a company undertakes to avoid going into immediate liquidation.
“The risk of not having a clear definition of the role is that you could see ‘cowboys’ proliferate the industry,” he says. “The role should be regulated to eliminate this risk. When dealing with distressed companies, it’s important to have an expert, somebody who is able to assess the best option and develop a work-out solution, not just somebody who may have business experience.”