More than two years after the Commerce Committee reported back on the
Insolvency Practitioners Bill, Parliament took up the second reading of the Bill
late last week – the next step in what has been a long and protracted
The original Bill proposed a negative licensing regime, under which the
Registrar of Companies would have the power to prohibit individuals from acting
as insolvency practitioners.
The Commerce Committee changed this to a registration system, but without
requiring insolvency practitioners to have any minimum qualifications or
experience. This means that people will be able to hold themselves out as
"registered insolvency practitioners", implying that they meet a minimum
standard of proficiency – even though they may not be qualified at all.
As a result, the Bill has been the subject of widespread criticism, and INSOL
New Zealand and NZICA have proposed an alternative initiative for
self-regulation by the industry.
All eyes have therefore been on the government's response to the Commerce
Committee's report. In the second reading, the Minister of Commerce said that
the government supports the Commerce Committee's recommendation for
The Minister also said that a "substantial amount of work has been going on
behind the scenes since the Bill was reported back from the select committee",
and that the government will be introducing a supplementary order paper that
proposes further amendments to the Bill.
Interestingly, although the Minister did not specifically address the
criticism of the Bill, he said that it is "especially important" that investors
and creditors have confidence that "the insolvency practitioner has the minimum
skills for the job". Given that the current Bill sets no minimum skill level, it
remains to be seen whether the supplementary order paper will address this
Progress, however, continues to be slow. Although 12 speeches are scheduled
for the second reading of the Bill, debate was interrupted half way through the
third speech. We will continue to monitor progress on the Bill, and keep you
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