2 Sep 2016

Plan to regulate insolvency sector welcomed

11:00 am on 2 September 2016

A plan to regulate the insolvency sector and shut down unscrupulous operators is being welcomed by an industry body.

insolvency folder

Photo: 123RF

The government has released the first part of a review into insolvency laws, which recommends licensing for practitioners and steps to improve protection for creditors in voluntary liquidations.

The working group's report said current regulation fell short of ensuring creditors could have confidence that practitioners handling corporate insolvency are qualified and bound by an acceptable code of ethics.

It also documented several cases of dishonesty, incompetence and failures to manage conflicts of interest by those handling insolvencies.

Partner John Fisk with business advisory firm PWC was a member of the working group, and said New Zealand's standards were lagging behind many other countries.

He said those in charge of insolvencies were handling large sums of money in trust on behalf of creditors in difficult circumstances.

"So to have an unregulated environment where practitioners have absolutely minimal skills to qualify for that sort of position is something that needed to be urgently addressed."

The industry body, the Restructuring Insolvency and Turnaround Association (RITANZ), had been calling for action to curtail the activities of rogue operators who did not necessarily act in the best interests of creditors in insolvency matters.

"Currently in New Zealand almost anyone, including those with criminal convictions, can operate as an insolvency specialist," said chairman Brendon Gibson.

"We've long held the view that this needs to change and this is why we implemented our own accreditation system."

Commerce and Consumer Affairs Minister Paul Goldsmith said he was seriously considering the report and wanted public feedback before final decisions.

The deadline for [http://www.mbie.govt.nz/info-services/business/business-law/insolvency-law-working-group/consultation-report-no.1-insolvency-practitioner-regulation-and-voluntary-liquidations

feedback on the report] is 7 October.

A second part of the review dealing with voidable transactions and Ponzi schemes is expected later in the year.

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