In a victory for common sense and following lobbying by VECCI and other business groups, the Federal Government has backed down on a plan to significantly increase the capacity of trustees to claw back the assets of a bankrupt, their spouse or a third party.  VECCI had acknowledged that there may be a case to strengthen the asset recovery powers of bankruptcy trustees – after all, small businesses are often creditors whose commercial interests are compromised by the bankruptcy. 

However, we had major concerns with the way in which the Government was trying to achieve this by introducing blanket legislation that would be indefinitely retrospective and reverse the onus of proof by requiring bankrupts to prove that transfers of assets to third parties were not intended to defeat creditors.  Our submission to the Government argued that the law must be designed to capture those who act or intend to act in bad faith, NOT those who have no intention to defraud their creditors. 

VECCI's concern was that the proposed legislation would prevent what up until now has been regarded as both a sensible and legitimate business strategy for individuals to protect their assets in the event of bankruptcy.  Equally worrying was that the measures would create a significant disincentive to entrepreneurship and risk taking.