Recommendations
93. It is recommended that the Committee:
General
1. agree that the regulations under the Insolvency Act 2006 provide for advertising of notices to be by publication on the Insolvency and Trustee Service Website and in the Gazette, and permit notices to refer to more than one matter or bankruptcy;
2. agree that the regulations under the Insolvency Act 2006 contain the contents of regulation 17 of the Insolvency Regulations 1970, in relation to the services of notices, and require notices served on the Assignee be served at the Assignee's office;
Bankruptcy
3. agree that the regulations under the Insolvency Act 2006 prescribe the information to be provided in debtor's applications for adjudication as a bankrupt, creditor's claim forms, applications by a bankrupt for consent to leave New Zealand, and applications by a bankrupt to enter into or carry on business, and notices sent by the Assignee to a person adjudged bankrupt;
4. agree that the regulations under the Insolvency Act 2006 provide that the Assignee may, having regard to the interests of creditors and the bankrupt, refuse any application from an undischarged bankrupt to leave New Zealand or to carry on business, or grant such consent unconditionally or subject to any conditions he or she thinks fit;
5. agree that the regulations under the Insolvency Act 2006 set out the procedure for giving summons for private examinations of bankrupts;
6. agree that the regulations under the Insolvency Act 2006 provide for expenses to be paid to a person who is summonsed to a private examination or a public examination of a bankrupt, as provided for in the Witnesses and Interpreters' Fees Regulations, but that the bankrupt's expenses be limited to travelling expenses;
7. agree that the regulations under the Insolvency Act 2006 include the contents of regulations 27 and 29-32 of the Insolvency Regulations 1970, relating to firms or partnerships to be adjudicated bankrupt, and the contents of regulation 63 of the Insolvency Regulations 1970, which permit the Assignee not to incur expenses without guarantees from creditors;
8. agree that the regulations under the Insolvency Act 2006 provide for creditors to notify the Assignee of any opposition to discharge of a bankrupt 5 working days before the final hearing or automatic discharge;
Compositions
9. agree that the regulations under the Insolvency Act 2006 include the contents of regulations 28 and 35-39 of the Insolvency Regulations 1970 relating to compositions;
Proposals
10. agree that the regulations under the Insolvency Act 2006 include the contents of regulations 51 to 62 of the Insolvency Regulations 1970 relating to proposals with minor variations, and set out the procedure for creditor's meetings in proposals and for the proving of debts;
Summary Instalment Orders
11. agree that the regulations under the Insolvency Act 2006 specify the information to be provided in applications for summary instalment orders, variations or discharges of summary instalment orders and in notices of applications for summary instalment orders;
12. agree that the regulations under the Insolvency Act 2006 require supervisors to give notice of the making of the summary instalment order, any variation, or any default by the debtor to creditors and (where appropriate) the debtor;
13. agree that the regulations under the Insolvency Act 2006 set out the procedures for approval of creditor's claims, and for objections to supervisor's decisions on creditor's claims to be lodged with the Official Assignee;
14. agree that the regulations under the Insolvency Act 2006 provide for the supervisor to give the Official Assignee (if required by the Official Assignee) notice within 20 working days of a summary instalment order being discharged, together with a statement of account where the Official Assignee's trust account was not used to facilitate payments to the creditors;
15. agree that the regulations under the Insolvency Act 2006 set out requirements for the payments of dividends and for any excess money at the completion of a summary instalment order to be paid to the debtor;
16. agree that the regulations under the Insolvency Act 2006 allow the Official Assignee to require proposed supervisors to provide credit and security checks verified by statutory declaration and for the Assignee to approve the appointment of a supervisor on any terms and conditions he or she thinks appropriate;
17. agree that the regulations under the Insolvency Act 2006 provide that a supervisor give a written direction to employers specifying the date by which the employer must comply with a direction for payment of part of a debtor's earning to the supervisor's account, and require the direction to be given by post or personally;
18. agree that the regulations under the Insolvency Act 2006 permit a supervisor under a summary instalment order to use the trust account operated by the Official Assignee for bankruptcies, and, if a supervisor elects not to use the Official Assignee's trust account, require the supervisor to bear the cost of any bank fees;
19. agree that the threshold for liquidating smaller debts, rather than paying them by instalments, be increased from $5.00 to $200.00 and the threshold for accumulating dividends increased from $2.00 to $20.00;
20. agree that the regulations under the Insolvency Act 2006 provide for the content of rules 19, 20(5), 20(6), 22 to 23, 25, 26 and 29 of the Summary Instalment Orders (District Court rules) 1970 with variations to reflect that summary instalment orders will be made by the Assignee and other changes to be consistent with the Insolvency Act and recommendation 18 and 19 above;
No Asset Procedure
21. agree that the regulations under the Insolvency Act 2006 set out the information required in an application for entry into the No Asset Procedure, the information required in a notice from the Official Assignee to a person admitted into the No Asset Procedure, and a notice terminating the No Asset Procedure;
22. agree that the regulations under the Insolvency Act 2006 provide a means test for admission into the No Asset Procedure based on whether the applicant's income and income from any related persons, taking into account their and their dependents' living expenses, is sufficient to pay their debts;
Statement of Affairs
23. agree that the regulations under the Insolvency Act 2006 require the statement of affairs in relation to bankruptcy, an application for a summary instalment order, and an application for entry into the No Asset Procedure to contain the applicant's full name (and any aliases and/or other names used in the last 7 years), date of birth, gender, contact details, IRD number, passport number, employment details, income and expenditure details, details of assets, liability and contingent liabilities;
Public registers
24. agree that the regulations under the Insolvency Act 2006 provide for the year of birth of bankrupts, persons subject to summary instalment orders and the No Asset Procedure to be disclosed on the relevant public registers;
25. agree that the regulations under the Insolvency Act 2006 provide for the Assignee to refuse access to the public registers where necessary for maintenance of the register, in response to technical difficulties, or to ensure security or integrity of the register;
Accounts and records
26. agree that the regulations under the Insolvency Act 2006 provide for accounting and records to be kept by the Assignee containing the information set out in regulations 6, 7, 9, 10 and 12 of the Insolvency Regulations 1970, except for regulation 6(2)(b);
27. agree that the regulations under the Insolvency Act 2006 provide for the keeping of the same records by the supervisor under a summary instalment order or trustee under a proposal as required by the Assignee in bankruptcy;
28. agree that the regulations under the Insolvency Act 2006 contain the content of regulation 61 of the Insolvency Regulations 1970, which allows the Court Registrar to order an audit of a trustee's accounts under a proposal;
29. agree that the regulations under the Insolvency Act 2006 allow a proven creditor to inspect the summary of affairs, creditor's claims and application forms in relation to a summary instalment order;
30. agree that the regulations under the Insolvency Act 2006 provide for publication of the final statement of receipts and payments by the Assignee on the ITS website and in the Gazette with notification on the ITS website;
Fees and remuneration
31. agree that the regulations under the Insolvency Act 2006 provide for a $200 (GST inclusive) fee for an application for a debtor's petition and a $100 (GST inclusive) fee for a summary instalment order, recoverable as a first charge on the assets in the insolvent estate;
32. agree that the regulations under the Insolvency Act 2006 provide for the rates of remuneration of supervisors of summary instalment orders and Assignees in relation to summary instalment orders and bankruptcies set out in the table below;
Rates of Remuneration under Summary Instalment Orders
|
Supervisors |
Official Assignee |
| Fees (as a percentage of the recovered assets) under Summary Instalment Orders |
7.5% |
2.5% |
Rates of Remuneration in Bankruptcy
| Position |
Current hourly rate
(excluding GST) |
Proposed hourly rate (excluding GST) |
| Official Assignee/Deputy Assignee |
$65 |
$200 |
| Legal and Accounting Staff employed by the Official Assignee |
$70 |
$200 |
| Insolvency Officers |
$40 |
$140 |
33. agree to amend the Companies Act 1993 Liquidations Relations 1994 to provide for the rates of remuneration for the Assignee, when acting as a liquidator, and for private, Court appointed liquidators, set out in the table below.
| Position |
Current hourly rate (excluding GST) |
Proposed hourly rate (excluding GST) |
| Liquidator |
$65 |
$200 |
| Legal and Accounting Staff employed by the liquidator |
$70 |
$200 |
| Other employees of a liquidator |
$40 |
$140 |
34. Note that the increase in revenue for the Insolvency and Trustee Service from the fees proposed in the Cabinet paper would be $302,000 in the 2008/2009 year, $458,000 in 2009/2010 and the out-years.
35. Note that Cabinet directed Ministry of Economic Development officials to investigate and report back by 31 December 2007 on options to part or fully fund the additional responsibilities for the Insolvency and Trustee Service outputs through recovery methods beyond 2007/2008 [CAB Min (07) 12/1/(8) refers].
Deed of company administration
36. agree that the regulations under the Companies Act 1993 provide that the terms of a deed of administration contain prescribed default terms similar to those set out in the Australian Corporation Regulations 2001;
37. agree that the regulations under the Companies Act 1993 set out the information required in the accounts to be filed with the Registrar of Companies under a deed of administration;
Drafting instructions
38. invite the Minister of Commerce to instruct Parliamentary Counsel to draft regulations pursuant to the Insolvency Act 2006 and to the Companies Act 1993, and changes to the Companies Act 1993 Regulations 1994, prescribing the matters referred to in this paper and such other matters that may be necessary for or incidental for the administration and implementation of the Insolvency Act 2006 and the Companies Amendment Act 2006;
39. invite the Minister of Commerce to instruct Parliamentary Counsel to draft Commencement Orders bringing the Insolvency Act 2006 and the changes to the Companies Act 1993 set out in the Companies Amendment Act 2006 into force on the same day as the respective regulations come into force; and
40. agree to the release of this paper on the Ministry of Economic Development website.
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