Wilkinson Kate: Insolvency Law Reform Bill — In Committee 
Wilkinson Kate: Insolvency Law Reform Bill — In Committee 
[Volume:634;Page:6044] 
KATE WILKINSON (National) 
: 
 In rising to speak to Part 5 of the Insolvency Law Reform Bill I point out that it is in four subparts—as we know. 
The first three subparts are mostly relatively straightforward machinery-type provisions with which I do not have any issue. Subpart 1 as Mr Tremain stated deals with composition during bankruptcy the passing of resolutions the fact that compositions must be approved by the court the procedure for court approval the deed of composition etc. Subpart 2 deals with the proposals. It includes a definition of “debt” and the allowance for an insolvent to make a proposal whether that be by way of a compromise a time payment assignment or other. Again that proposal must be filed in and approved by the court. The subpart continues with the various duties of the insolvent and the trustee. Subpart 3 deals with the summary instalment orders and includes the time payment who can apply for an order the supervising of such an order the role of the supervisor and rules for summary instalment orders. National does not take too much issue with most of those provisions. 
The provision that causes us the most angst as National members have already mentioned is subpart 4 relating to the no-asset procedure. It sounds good in practice. An individual can choose to enter into the scheme for 12 months in return for a write-off of up to $40000—unfortunately at the expense of creditors. Although this may have some practical advantages it sends a very clear message that individual responsibility is not important. Basically it says that people can do what they like and take no responsibility because never mind someone else will pay for their mistakes. 
We all know that insolvency laws should always provide a balance. They do by their very nature allow for mistakes but they should also require responsibility to be taken for those mistakes so that debtors can learn from them get over them then start again; it should not be that the mistakes can just be swept under the carpet and 12 months later the debtor can start again. But it seems that under subpart 4 of Part 5 there are no such words as “mistake” and “responsibility”. It is a bit like pretending that failure does not exist when we all know that it does. 
 Insolvency laws should balance the responsibility for failure and the opportunity to start again. But they should also never forget the creditors who are not always the Inland Revenue Department and who are not always the Government. It could be the creditors who stand to lose. This measure punishes the small-business owners—the self-employed—who are owed this money. It makes it too easy for the debtor to give up rather than try to trade through those difficulties. The debtor can give up and in 12 months’ time just start again and the poor small-business owner the self-employed creditor has no recourse whatsoever. 
The criteria for the no-asset procedure as set out in clause 359 are not particularly complicated. The assignee must be satisfied on reasonable grounds that the debtor has no realisable assets; the debtor has not previously been admitted to the no-asset procedure so this is one strike and you are out; the debtor has not previously been adjudicated bankrupt; the total debts are between $1000 and $40000; and under a prescribed means test the debtor does not have the means of repaying any amount towards those debts. 
Throughout the no-asset procedure the debtor must not obtain any further credit—which seems to make sense—including hire purchase whether it is jointly or by himself or herself. But it does not seem actually to describe what the debtor can do in that 12-month period. Does the debtor just sit on his seat and do nothing? Can the debtor actually continue with employment? Can the debtor if jointly in business with say his or her spouse continue that business with the assignee’s consent? This part of the bill does seem to be a wee bit silent as to what the debtor can actually do during that 12-month no-asset period.