Hughes Darren: Questions for Oral Answer — Questions to Ministers 
Hughes Darren: Questions for Oral Answer — Questions to Ministers 
[Volume:606;Page:3486] 
11.  
DARREN HUGHES (NZ Labour—Otaki) 
 to the  
Minister of Commerce 
: What recent decisions has the Government made in relation to insolvency law? 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 The Government has made decisions on the four Tier Two papers that were consulted on last year. They include introducing a business rehabilitation regime similar to the Australian voluntary administration framework; restrictions around phoenix company arrangements; a streamlined no-asset procedure for low-income debtors with few or no assets; and the development of a legislative framework to allow for a single insolvency proceeding for cross-border insolvencies. 
Darren Hughes 
: What specific measures are proposed in respect of the phoenix company arrangements where an insolvent company transfers its assets to another company? 
Hon LIANNE DALZIEL 
: The keys issues in the discussion document centred on assets that were not sold for fair value reducing the availability of funds to satisfy creditors of the company in liquidation. It is proposed to make criminal penalties available to the court when directors are shown to have acted in bad faith to defeat the legitimate interests of creditors. There will also be a restriction on the re-use by a former director of a company name when that company is in insolvent liquidation. This is a way of preventing a new company from trading off the goodwill of that previously liquidated company when the principles are the same. 
Hon Tony Ryall 
: Can the Minister advise whether the Government’s desire to harmonise with Australia will see New Zealand adopt the Australian standard where directors will be personally liable for unpaid taxes of such companies; and what is the Government going to do to compensate unsecured creditors who may lose a claim on the assets of a company because of the cost of an unsuccessful rehabilitation? 
Hon LIANNE DALZIEL 
: The business rehabilitation regime is to be modelled on the Australian voluntary administration framework and there are very strong protections around the area of creditors during the period when the rehabilitation is attempted. I should say to the member that if he looks at the detail of what has occurred in Australia he will see that we have seen I think about 20 percent of companies in Australia using the voluntary administration process. That is now 64 percent of total company insolvencies.  
Dail Jones 
: When does the Minister envisage introducing such legislation how long does the Minister envisage it will take to pass through the House and will it include provisions that will prevent people from building one set of houses—as we have seen in the leaky homes situation—for one-purpose development only? 
Mr SPEAKER 
: Two of those three questions can be commented on. 
Hon LIANNE DALZIEL 
: The first question concerned the introduction of legislation. I anticipate having legislation in the House this year. There are both the Tier One and Tier Two paper decisions to be built into a legislative amendment and a decision still has to be taken as to whether to have a single insolvency Act rather than amend the existing laws. Secondly I would anticipate good cooperation on all sides of the House to see the matter proceed as quickly as possible. 
Stephen Franks 
: What evidence has the Minister that following Australian law will not simply fatten the purses of the undertaker professionals who take fees for longer while dog companies are on life support and while the unsecured creditors watch good money being thrown after bad? 
Hon LIANNE DALZIEL 
: I do not wish to disappoint the member but very many successful business rehabilitations have been conducted under the voluntary administration framework. That saves a company from falling over and that is preferable to a liquidation situation.