Background Information
The Associate Minister of Commerce, Laila Harré, released a set of public discussion documents in February 2001 on the first group of issues to be considered as part of the review:
The documents released included a Background and Framework Document that set out the principles and objectives of the review and the specific topics and timeframe in which they were to be addressed. Four discussion papers accompanied it. Two of the papers (Voidable Transactions and Priority Debts) were a continuation of work previously undertaken by the Ministry and the Law Commission. They outlined the work undertaken to date, analysed the submissions received and went on to indicate the Ministry's preliminary policy approach to a number of key issues.
The papers on Bankruptcy Administration and Phoenix Companies were preliminary documents, which identified the problems arising in these areas and asked a series of wide-ranging questions about possible solutions.
Submissions closed on 6 April 2001. Policy decisions on the following issues arising out of this stage of the review were announced in November 2001 by the Associate Minister of Commerce:
A further set of decisions on the Role of the State issues were announced on 28 February 2002 by the Associate Minister.
These decisions were based on issues raised by the Law Commission in its advisory report Promoting Trust and Confidence [link to Law Commission website] and a consultation questionnaire released by the Ministry on May 2001. The report and questionnaire also covered the issues of business rehabilitation, statutory management and whether insolvency law should be combined within a single statute. A decision has since been made to retain the current structure of insolvency legislation.
The final set of decisions were announced in February 2003 by the Minister of Commerce. The key decisions are:
- to introduce a business rehabilitation regime based on the Australian voluntary administration provisions;
- to address the phoenix company problem by introducing further criminal penalties and restrictions on the re-use of insolvent company names by company directors;
- to provide a mechanism to enable streamlined procedures to be implemented under the UNCITRAL Model Law for Cross-Border Insolvency;
- to implement an alternative to the current bankruptcy procedure for insolvent individuals with no realisable assets.
Cabinet Papers and Regulatory Impact and Business Compliance Cost Statements on the above decisions were released in December 2003.
Draft legislation and a discussion document on remaining policy issues including the regulation of liquidators and administrators were released in April 2004. The Minister of Commerce introduced the Bill to Parliament on 21 December 2005. A media statement on the introduction was released by the Minister's Office.
The Bill passed its first reading on 21 February 2006 and was referred to the Commerce Select Committee for its consideration. Public submissions on the Bill to the Select Committee closed on 7 April 2006. The Select Committee reported back to the House on 10 August 2006. The Minister also provided a Ministerial update on insolvency law reform [link to Beehive website] at the annual LexisNexis Insolvency Conference in Auckland on 24 February 2006.
The Insolvency Act 2006, Companies Amendment Act 2006 and Insolvency (Cross-border) Act 2006 were enacted by Parliament on 7 November 2006.
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