Insolvency Amendment Bill
The Minister of Commerce, Hon Simon Power, introduced the Insolvency Amendment Bill (the Bill) to Parliament on 9 March 2009. The Bill amends the Insolvency Act 2006 (the Act). The Act was enacted as a result of a major review of New Zealand's personal and corporate insolvency laws and came into effect in December 2007. This Act repealed and replaced the Insolvency Act 1967 and also introduced the new No Asset Procedure (NAP) as an alternative to personal bankruptcy.
The Bill proposes to make some small but significant amendments to the Act in relation to the following:
- Preventing fraudulent debts under the NAP from being potentially cancelled when a person is discharged from that process. The NAP is designed to write-off personal debts of up to $40,000, provided the debtor meets the NAP entry criteria under the Act;
- Allowing the Official Assignee (OA) to extend the time period that a debtor is in the NAP process. This would allow for a thorough investigation of any late information or objections that the OA receives regarding the termination of the debtor's entry to the NAP process;
- Strengthening of the insolvent gift provisions to enable the OA to cancel gifts made by a debtor in the period leading up to his or her bankruptcy. These transactions are generally entered into to avoid payments to creditors from the bankrupt's assets; and
- Providing improved access to the NAP and bankruptcy public registers to enable creditors to make informed lending decisions.
The above amendments will maintain the integrity of the personal insolvency processes, namely the NAP and bankruptcy. Further, the changes are expected to promote confidence in the OA's ability to administer these processes effectively and efficiently for the benefit of the creditors.
The Commerce Minister's press release [link to external website] and the Cabinet paper is available on this website.
A copy of the Bill will be made available in due course on the New Zealand Parliament website [link to external website].
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