Copeland Gordon: Insolvency Law Reform Bill — First Reading 
Copeland Gordon: Insolvency Law Reform Bill — First Reading 
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GORDON COPELAND (United Future) 
: 
 I rise on behalf of United Future to take a fairly brief call in the first reading debate on the Insolvency Law Reform Bill. As other speakers have already said it is timely that we as a Parliament grapple with what is a fairly formidable bill—about 290-plus pages—to overhaul and review New Zealand’s law relating to bankruptcy for individuals and insolvency and liquidation for companies. 
I would like to pick up on one or two aspects of the bill in my brief remarks. Firstly I am delighted that the bill will provide for the rehabilitation of viable insolvent companies where it is expected to result in a better return to the creditors of the insolvent companies. I certainly as an MP have had a number of suggestions from the business community that in New Zealand we should aim for a kind of chapter 11 situation as it is known in the United States whereby a company that realises that if it perseveres with its existing cost structure etc. it will end up insolvent can with the assistance of creditors and the law continue trading with a view to re-emerging as a viable ongoing enterprise. I think there is a lot merit in that. 
United Airlines which I have flown with quite a bit is presently in a chapter 11 arrangement in the United States and it would be devastating for the American consumers and people in many many cities in that country if United Airlines had been forced into premature bankruptcy rather than being given a chance to work its way through the situation which it appears to be doing successfully. I think that is to be applauded. 
The other thing I see in the Government’s overall objectives which I likewise like is that we need to ensure that our insolvency laws for businesses and bankruptcy laws for individuals do not stifle innovation but encourage responsible risk-taking and entrepreneurship rather than penalise people who with the best of intentions start off to improve their lot in life and make an important contribution to our economy and then find that they have come adrift. 
We must continue to foster that number eight fencing wire risk-taking Kiwi philosophy. I agree with the previous speaker Chris Auchinvole. I also find a lot of businesses are now saying that they are stifled by the heavy hand of the State. I am thinking particularly of the way in which our occupational safety and health laws are administered on the ground—to eliminate risk. Indeed business surveys of small and medium business indicate that occupational safety and health regulations are now their No. 1 oppressive regulatory undertaking. Sometimes the thought behind it is good—we want to reduce industrial accidents—but the application of the law is aimed at stifling legitimate risk-taking which is the lifeblood of business. So we need to ensure that we get those kinds of balances right. This bill does not address that issue particularly but it is a very serious issue. Therefore I welcome a Government objective that says we have to recognise that business does include risk-taking and learn to live with it. After all it is a proven fact of business in New Zealand when we look around that many businessmen and companies that go on to be very successful have been through one or more insolvencies or bankruptcies. Very often it is the very lessons that are learnt through that experience—and I am not saying it is a desirable outcome; just that it is a factual situation—that sow the seeds of being very successful in the long term. We need to bear that in mind. 
Accordingly I also commend the no asset procedure in the bill as an alternative to personal bankruptcy. The commentary on the bill states that it is designed to be less punitive to individuals and have significantly less social stigma attached to it. I think that also is a good thing. Again we need to keep a balance but as I have just said the reality is that very often it is by going through bankruptcy or insolvency that we learn the lessons of life and then go on to be very successful. It is very very important that we keep that door open to allow people to recover from such situations and go on to contribute positively to our society and our economy. Again like Chris Auchinvole I do draw the line at people who deliberately use our corporation law and our insolvency law to try to escape legitimate responsibilities to their creditors. As others have said I think we need to be sure and shut the door and close loopholes on people who can for example deliberately from day one form a company with the idea that having done a couple of highly questionable projects—I am thinking for example of some of the leaky homes—they will then place that company into liquidation and walk away from their responsibilities. So that is the other side of the ledger and we as I mentioned need to take both into account and ensure that we have a balanced outcome. So with those few remarks I signal United Future’s support for this bill.