13 October 2006

Insolvency practitioners rules up for discussion

Commerce Minister Lianne Dalziel today released proposals for the regulation of insolvency practitioners, company liquidators and administrators after earlier submissions on insolvency law reform overwhelmingly supported the establishment of a regulatory framework.

“While submitters felt the great bulk of liquidations are carried out by capable and honest practitioners, concerns were expressed about the competence and professionalism of a minority of practitioners,” Lianne Dalziel said.

Lianne Dalziel said concerns about the lack of a regulatory framework for insolvency practitioners had also been expressed in submissions on the Insolvency Law Reform Bill currently before Parliament, particularly in the proposal to introduce a Voluntary Administration regime.

Lianne Dalziel said that while insolvency practitioners were a relatively small industry in New Zealand, they carried out a specialised task which is crucial to protecting and promoting the integrity of the corporate insolvency system, involving the liquidation of insolvent companies, or the rehabilitation of a company or the viable parts of a business.

“Despite undertaking such a crucial role in New Zealand commerce, insolvency practitioners are not required to be licensed or registered by a regulatory body with powers to investigate possible misconduct. There are some statutory requirements, but practitioners are not required to have particular qualifications or levels of education, nor do they have to belong to any professional organisation.

“Because of this, there is no official record of the number of insolvency practitioners or their qualifications. This information gap has the potential to create problems as those appointing practitioners may not always know whether practitioners are competent to liquidate or rehabilitate companies,” Lianne Dalziel said.

Lianne Dalziel said the discussion document was just that – a document for discussion.

"The government has not decided to introduce a regulatory framework for this small but important profession, but we have been persuaded to take further advice on the matter."

The discussion document is available at www.med.govt.nz. A copy of the Insolvency Law Reform Bill as reported back from the Commerce Select Committee is available at www.parliament.govt.nz.

ENDS

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