Worth Richard: Insolvency Law Reform Bill — In Committee 
Worth Richard: Insolvency Law Reform Bill — In Committee 
[Volume:634;Page:5733] 
Dr RICHARD WORTH (National) 
: 
 As will be apparent from the material before members National has some real difficulties with this bill. There is no doubt that it was well-intentioned legislation and I think it is always a tragedy when commercial legislation of some significance does not attract support across the Chamber. Clearly it was intended that this legislation have that support. 
I simply note in dealing with Part 1 that the concerns of National are set out in a minority report that appears in the commentary on the bill. It is noted there that National opposes the bill and in saying that the bill is being touted as the first major review of company and personal insolvency law in four decades those members of the National Party who participated in the deliberations of the Commerce Committee enter their reservations. Those reservations are substantially centred on the concept of voluntary administration and we also have reservations in respect of the no-asset procedure. There will be an opportunity to talk on those two issues later in the context of the legislation. 
It is interesting to reflect on why it was seen as necessary to change the title from “bankruptcy” to “insolvency”. Bankruptcy has a very settled meaning—a meaning that is well established in history—and insolvency is somehow seen as a softer and in some sense a more kind word. Bankruptcy which is of course what insolvency is is a legally declared inability or an impairment of ability of an individual to pay his or her creditors. It can arise in two main ways. First of all a declared state of bankruptcy can be requested by creditors in an endeavour to recoup a portion of what they are owed but in the overwhelming majority of cases the bankruptcy is initiated by the bankrupt individual or organisation. 
I have said that this concept of insolvency has a long history. Without getting involved in that history to any great extent it is interesting that in the Old Testament Moses’ laws prescribed one “holy year” that should take place every half a century when all debts were eliminated amongst the Jews and all debt slaves were freed due to the heavenly command. Of course in Ancient Greece as the Minister in the chair the Hon Lianne Dalziel nodding wisely will know bankruptcy did not exist. If a father owed—and since only locally born adult males could be citizens it was fathers who were legal owners of property—and he could not pay his entire family of wife children and servants were forced into what was called debt slavery until the creditor recouped losses via their physical labour. Many city states in Ancient Greece limited debt slavery to a period of 5 years and debt slaves had protection of life and limb which regular slaves—mostly war prisoners—did not enjoy. 
Finally just on these historical matters and I will be able to deal in greater substance with other parts of the bill at later calls the word “bankruptcy” is formed from the ancient Latin “bancus”—a bench or a table—and “ruptus” which means broken. A bank originally referred to a bench that the first bankers had in public places in markets and fairs on which they tolled their money and wrote their bills of exchange—that type of activity. So when a banker failed he “broke his bank” to advertise to the public that the person to whom the bank belonged was no longer in a position to continue his business. This practice was very frequent in Italy and it is said that the term “bankrupt” is derived from the Italian “bancarotta”—a broken bench. But enough of that. 
Part 1 covers in a preliminary way some key provisions and I will turn to those now. First of all clause 3 has interpretation provisions and possibly of some relevance is the definition of “current summary instalment order”.