Insolvency - latest news from the courts and legislators

Bell Gully Insolvency Update, 27 January 2006

The Insolvency Law Reform Bill was introduced into Parliament on 21 December 2005, following a Government-initiated insolvency law review that began in 1999 and the release for consultation of a draft bill in 2004.

A summary of the main aspects of the draft bill are:

• introduction of a voluntary administration regime for companies, similar to that which exists in Australia;
  
  
• changes to the voidable transaction and preferential payments provisions of the Companies Act 1993;
  
  
• introduction of new phoenix company provisions to deal with companies that carry on business using a similar name to that of a failed company;
  
  
• adoption of the United Nations Commission on International Trade Law (UNCITRAL) Model Law on cross border insolvency; and
  
  
• introduction of a no asset procedure as a one-off reprieve from bankruptcy for the small time individual debtor out of his or her financial depth.

The Bill is expected to receive its first reading in Parliament in the first half of this year.

Commerce Minister Lianne Dalziel has stated that, while she expects widespread support for the new "phoenix company" provisions and the tightening of the voidable transaction provisions, she expects that the two areas of reform that will attract the most debate are:

• the streamlining of the bankruptcy administration process and the introduction of a new "no asset procedure" as an alternative to personal insolvency; and
  
  
• the introduction of a voluntary administration procedure for companies with potential for rehabilitation.

Enquiries and information

For more information on any of the cases, articles and features in Financial Services Quarterly, please email Rachel Gowing or call on 64 9 916 8825.