Worth Richard: Insolvency Law Reform Bill — In Committee 
Worth Richard: Insolvency Law Reform Bill — In Committee 
[Volume:634;Page:5747] 
Dr RICHARD WORTH (National) 
: 
 Just while the Rt Hon Winston Peters is in the House I have to say that his comments were a gross abuse of the Committee stage of a bill. But I want to deal with Part 2 of the Insolvency Law Reform Bill in a very precise way and before doing that I will just make two quick preliminary comments. The first comment is that this particular bill merited close consideration by the Commerce Committee and by a number of Labour MPs on that committee. They were Charles Chauvel Shane Jones Winnie Laban Mahara Okeroa and Maryan Street. As I look around this crowded debating chamber I see those people remaining mute not prepared to contribute to this legislation at all leaving the hapless and helpless Minister trapped in the middle unable to respond in a substantive way to some of the more significant points advanced. I think that that is a tragedy because surely in those names that have been mentioned there was a faint asset reflective of intellectual power but in the Committee stage it has been completely denied us. That is the first point. 
The second point I make is that this particular part Part 2 has a number of subparts—six altogether. Those subparts are: “Bankruptcy and its alternatives” “Process of being made bankrupt” “Appointment of a receiver” “Adjudication” “What happens on adjudication” and “Role of creditors”. I condemn the Government for this method of legislative drafting because by having one part and multiple subparts it starkly limits the length of Committee stage contributions. 
In clause 8 of Part 2 the alternatives to bankruptcy are laid out but only three are described—inappropriately and inadequately I would say. The three that are described are a proposal to creditors paying creditors in instalments under a summary instalment order—and we have seen how in the Part 1 definitions there has now been inserted a definition of a current summary instalment order—and finally entry to the no-asset procedure which is the subject of comment in National’s minority report. But there are of course many other options and I would like to highlight what those other options are in the context of clause 8. 
Firstly there must be sale of assets because it is quite possible that people in financial difficulties might solve those difficulties by the sale of some of their assets and money raised from the sale of assets can of course be used to pay their debts. The second possibility is that of budgeting—of limiting one’s outgoings to what one can afford. Establishing a budget might also identify existing expenses that can be reduced or eliminated and the budget advisory service is available to provide assistance and support in that regard. Another possibility relates to a creditors’ pool which involves all of the debts being combined and then repaid by regular payments. Quite clearly such a proposal must be agreed to by all the creditors involved and it is normally administered by a third party such as a budget adviser an accountant or a financial adviser. Refinancing is another possibility. It might be possible to refinance current debts perhaps using a mortgage broker a banker an accountant or a solicitor for suggestions on appropriate financing alternatives. 
So there are these other possibilities that must be considered as we look at the Draconian step of bankruptcy and the impact of bankruptcy on the interests of secured and unsecured creditors—for it is very rarely the case that all the debts are repaid as a result of the formal processes proposed by the Insolvency Law Reform Bill which were earlier the subject of action by the Bankruptcy Act.