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Bills to support insolvency law get third reading

13 June 2019

The Insolvency Practitioners Regulation (Amendments) Bill and the Insolvency Practitioners Regulation Bills had third readings on 12 June 2019. Commerce and Consumer Affairs Minister Kris Faafoi is in charge of the bills.

The purpose of the bills is to promote better outcomes under the corporate insolvency system by strengthening the regulation of insolvency practitioners. The bills support the outcome of insolvency laws so that if a business must be wound up, the assets are realised and distributed to creditors with clear rules and with minimum harm both to the insolvent party and to their creditors.

The bills introduce a robust new regime for the licensing of practitioners, providing effective mechanisms for holding them to account and requiring such things as continuing professional development.  

The Insolvency Practitioners Regulation (Amendments) Bill

This bill was formerly part of the Insolvency Practitioners Bill as reported from the Economic Development, Science and Innovation Committee. The committee of the whole House further amended the Bill and divided it into the following bills:

  • This bill comprising clauses 1 and 2, Parts 1 and 2, and Schedules 1 to 3
  • Insolvency Practitioners Regulation Bill comprising Parts 3 to 6 and Schedules 4 and 5.

Part 1 contains amendments to the Companies act 1993.

Clause 3B (Amendments to Part 15A (Voluntary administration)) inserts new sections 239F (Who may be appointed as administrator) and 239G (What administrator must do before appointment) substituted.

Clause 4B (Interpretation – clauses 4B to 6A) contain amendments to Part 16 (Liquidators).

Clause 6A inserts a new heading and sections 296A to 296D (Voidable dispositions).

Clause 8 (Penalty for failure to comply with the Act) - Amendments to Part 21 (Offences and penalties)) amends section 373(2).

Part 2 contains amendments to the Receiverships Act 1993.

Clause 12A (Interpretation) amends section 2(1) inserts definitions of insolvency practitioner, licensed insolvency practitioner, prohibition order and related company.

Clause 13 repeals section 5 and substitutes new section 5 - Who may be appointed as a receiver and clause 13A inserts new section 6A - What a receiver must do before appointment.

Clause 13I repeals section 36 and inserts a new section 36 – Meaning of failure to comply.

Clause 14 (Orders to enforce receiver’s duties) amends section 37 by repealing subsections (4) to (6) and substituting new subsection (4) to (6B) and (7),(9) and (10).

Section 10 comes into force on the day after the date of Royal assent. The rest of the Act comes into force on a date appointed by the Governor General by Order in Council, and one or more Orders in Council may be made bringing difference provisions into force on different dates. Any other provision comes into force on the first anniversary of the date of Royal assent.

Insolvency Practitioners Regulation Bill

Part4 relates to licences, accreditation, and role of the Registrar.

Clause 26 sets out ongoing competence requirements and clause 27 sets out the powers of an accredited body should a member fail to satisfy the requirements of a competence programme.

Clauses 28 to 32 provide for the cancellation and suspension of licences.

Subpart 3 (clauses 39 to 45) relates to the Register of licensed insolvency practitioners.

Subpart 4 (clauses 46 to 62) relates to accreditation.

Subpart 5 (clauses 63 to 70) relates to investigations by the Registrar.

Part 5 (clauses 71 to 79) contain provisions relating to insolvency practitioners. Subpart 1 contains the duty to report serious problems. Subpart 2 (clauses 77 to 79) relates to restrictions on insolvency practitioners.

Sections 16 to 20, 34 to 38, 46 to 48, 51 and 54 to 61, 68 to 70 and 81 to 92B come into force on the day after the date of the Royal assent. The rest of the Act comes into force on a date appointed by the Governor-General by Order in Council, and 1 or more Orders in Council may be made bringing different provisions into force on different dates.

Last updated on the 13th June 2019