Regulation of Insolvency Practitioners
[ Last Updated 15 August 2008 ]
A new negative licensing system has been adopted to address the issue of substandard insolvency practitioners operating in the insolvency industry.
Negative licensing involves the preclusion or suspension of incompetent or delinquent practitioners (as demonstrated by their prior action and performance) from operating as liquidators, administrators and receivers.
Given the small number of substandard practitioners taking up appointments currently, and further, given the small size of the insolvency industry, the negative licensing regime provides the best cost-effective option that is appropriate and proportionate to the problem and the size of the insolvency industry in New Zealand.
In addition to the negative licensing system, the disqualification criteria provisions will be tightened to preclude certain practitioners from appointment at the outset, and the Courts powers will be widened to replace practitioners that lack independence or have a conflict of interest.
A bill on the new proposals is expected to be introduced in Parliament sometime in the early New Year. Regular updates will be provided via MED's website as the Bill makes its passage through Parliament. A copy of the Cabinet paper and Regulatory Impact Statement and the media statement [link to Beehive website] can be accessed here.
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