iNO Opinion
You can imagine it must have been difficult for ex-liquidator Riad Tayeh to resist contributing a few cents worth of hard won wisdom when the Federal Government invited individuals and organisations to suggest improvements to the bankruptcy regime.
The doors were flung open for submissions in January 2021, which was only a month before a judge of the Supreme Court of Victoria ruled that Tayeh and his former business partner Anton de Vries were liable to pay a multi-million dollar debt to KordaMentha’s Craig Shepard and Mark Korda in their capacity as liquidators of Timbercorp.
“We allow trustees too much discretion for discharging bankrupts. Trustees have a vested interest. Discharge should be strict and subject to conviction of certain offences only. We need to remove discretion to change culture.” Bankrupt ex-liquidator Riad Tayeh.
As iNO has previously reported, subsequent attempts by Tayeh and de Vries to overturn the judgment were unsuccessful.
While de Vries had already relinquished his registration as a liquidator, Tayeh clung on to the bitter end which came on June 23 this year when the Federal Circuit Court made orders sequestering Tayeh’s estate and appointing Melbourne-based practitioner Stephen Michell as his trustee in bankruptcy.
At some point shortly afterwards, Tayeh either voluntarily relinquished his registration or ASIC cancelled it, but the co-founder of dVT Group had by then already made his views about bankruptcy clear in his public submission which has been published by the Federal Attorney General at Possible reforms to the Bankruptcy system.
While electing to have his name published Tayeh chose not to identify the fact that he was an insolvency practitioner, which he still was when submissions closed in February this year.
In iNO’s opinion however, what comes though loud and clear is that the current bankruptcy provisions are too onerous and trustees can’t be trusted, which is what many bankrupts-in-waiting would say.
“Our insolvency system is overly punitive,” Tayeh wrote.
“We seek to punish those that have been subjected to unfortunate economic circumstances because of the belief those going insolvent have done something wrong.”
Tayeh could not have been speaking about himself here. For almost 10 years he and de Vries resisted all attempts by the Timbercorp liquidators to recover the monies the courts ultimately decreed they owed, including refusing to offer a settlement that met the threshold Shepard and Korda could accept.
Along the way costs and interest swelled the amount owing. But as a veteran insolvency practitioner Tayeh would have been more than familiar with the process, not to mention the frustrations Shepard and Korda were feeling. Whatever else, the final outcome in his situation was not simply the result of “unfortunate economic circumstances”.
But in his submission Tayeh appears to gather the majority of debtors beneath the umbrella of blamelessness, victims of circumstances beyond their control who are then revictimised by the system and by trustees who can’t be trusted to wield their powers responsibly.
“We too often want to punish the many for the sins of the few,” he said.
“Debtors prisons ended long ago but the attitude that bankrupts should suffer is still pervasive especially within the insolvency profession and the regulators as it justifies their existence. We need to change this culture.
“We allow trustees too much discretion for discharging bankrupts. Trustees have a vested interest. Discharge should be strict and subject to conviction of certain offences only. We need to remove discretion to change culture.”
Vested interest? Unlike debtors of course.
Further reading:
Liquidator Bankrupted Over $5.4 Million Debt
It is unfortunate that you chose to run such an article in the manner in which it was written. I am disappointed you take such a stance.
My views have been the same since the legislation was proposed by the Turnbull government. my views were never motivated by my circumstances.
I have seen first-hand the destruction to lives bankruptcy can visit on unwitting directors.
Often families are destroyed by overzealous trustees wanting to merely recover fees.
the insolvency industry is expected to wind companies up efficiently often in in under a year but needs 3 years to look at bankrupt estates that are often much simpler to administer.
When I wrote my submission, I was aware of my likely fate and continue to be aware that. Given the history of this legislation, it is unlikely to be enacted in time to be of any assistance to me. Nor given my circumstances would I ever consider I would be afforded such assistance.
However, I have always been of the opinion that we should be rehabilitative not punitive in these matters.
I have seen directors bankrupted because of non-payment of company debtors resulting in the insolvency of the company and crystallisation of guarantees made by them.
Their resultant bankruptcy often leads to their family breaking apart and their inability to work in society productively.
In simple bankruptcies why shouldn’t the trustee do their job in a reasonable timeframe and let the bankrupt get on with their life.
It is always open to the trustee to extend a bankruptcy for non-compliance and any new legislation would likely provide for an extension for more complex bankruptcies.
Your story implies a sinister motive on my part which was not considered by me nor an outcome that I consider would ever benefit me. I understand insolvency and am not in the category of bankrupts I was referring to. My position remains the same, the insolvency industry needs to reflect where society is at. We are one of the last jurisdictions worldwide that remains punitive. My motivation for this submission is as a result of seeing how someone I know has been treated in bankruptcy, what it’s done to his family and to his mental health. He has become virtually destitute from once being a successful professional.
I would have thought you would have been more balanced in your approach
Subject to the statutory regime bankrupts are able to start again after the date of bankruptcy.
s 149D specifies specific grounds upon which a trustee is able to about to discharge – that is reviewable according to law. The trustee does not have to object if there is no proper purpose for doing so – i.e. that is in the interests of the administration of the estate. Unless that is so the purpose would clearly be reviewable. The legislation contemplated by then PM Turnbull has lapsed and will need to be reintroduced if it is to be enacted.