The Role of Technology in an Effective and Efficient Australian Small Business Insolvency Framework

In its 2017 report on the treatment of micro, small, and medium enterprises (MSMEs) in insolvency, the World Bank emphasised the importance of having an effective and efficient insolvency system to mitigate many of the challenges facing financially distressed MSMEs. These challenges include the lack of financial resources, a general lack of incentive to access insolvency procedures, creditor passivity, limited information, overlaps with the personal insolvency regime. In response to the ‘tsunami’ of MSME insolvencies that were expected following the economic impact of Covid-19, the Australian Government determined that the existing corporate insolvency framework of a one size fits all was no longer suitable. The simplified liquidation and debt restructuring regime was introduced by the Government in 2021 as a way of achieving a more effective and efficient insolvency system for MSMEs. It is the premise of this paper that the Australian Government small business insolvency law regime forms only part of what should be considered an efficient and effective insolvency framework for small business. Where effectiveness is measured by the extent to which the insolvency system achieves its intended objectives and efficiency is the measure of the extent to which the insolvency system achieves those objectives using the minimum amount of resources.The authors argue that the strategic use of technology is essential in predicting insolvency, lowering /saving costs, transforming insolvency work, and saving time. Accordingly, this paper seeks to highlight the importance of technology in an efficient and effective Australian small business insolvency framework