Rich Katherine: Insolvency Law Reform Bill — In Committee 
Rich Katherine: Insolvency Law Reform Bill — In Committee 
[Volume:634;Page:6052] 
KATHERINE RICH (National) 
: 
 I rise to speak to Part 8 and I would like to touch on an amendment that I have put on the Table. It arose out of the select committee process but was ignored at that stage. Although I totally agree with the role of business rehabilitation and the aim of voluntary administration one of the concerns raised by one of the leading accountancy firms was that one of the definitions we have of who can and cannot be a liquidator is far too wide. As a result I have spoken with representatives from PricewaterhouseCoopers and they continue to hold the view that one of the provisions new section 280(1)(cb) which is to be inserted by clause 471(1) is written so widely that some of the major accountancy firms could actually be blocked from doing some of the larger and more complex liquidations in this country. 
We are a small country we have only 4 million people and our major firms will have established often continuing business relationships with a number of clients. I totally understand the aim of defining who can be appointed to be a liquidator because we do not want some cowboy or someone who has a super-friendly relationship with the company directors and who can as a result of good relationships push things through for the benefit of the failed company but we do need to be able to ensure that our major accountancy firms are able to conduct their work. 
New paragraph (cb) of section 280(1) states: “(cb) a person who has or whose firm has within 2 years immediately before the commencement of the liquidation had a continuing business relationship (other than through the provision of banking or financial services) with the company its majority shareholder any of its directors”—and this is the main bit—“or any of its secured creditors unless within 20 working days before the appointment of a liquidator the board of the company resolves that the company will on the appointment of the liquidator …”. The concern is that our major accountancy firms may or may not have a continuing business relationship with some of the other creditors involved in the liquidation but they do have an ongoing business relationship with the main banks. For example the liquidation arm of PricewaterhouseCoopers may be involved in a liquidation but that firm may be providing to one of the major banks ongoing business services advice or some kind of service that means the firm has a continuing relationship with the bank which is of course one of the secured creditors. 
We have only a certain number of major firms in this country that can do the kinds of liquidations that are more complex and take more time—not the small mum and dad liquidations—and we have only a handful of banks. So if we look at all the major firms the chances are that they will have an ongoing business relationship with a bank that is likely to be one of the secured creditors in many of these situations. The last thing we want to do is limit the pool of skilled and experienced professionals who are able to undertake the medium to large complex liquidations in this country. 
This clause may have the unintended consequence of locking out those firms that have the expertise to deal with the big liquidations—the Feltex liquidation and the other liquidations that we have seen in this country. We are not so concerned about the small mum and dad operations which can be dealt with at arm’s length. It is the more complex ones where we rely on the skills and expertise of our top firms that are at issue. 
As we know there are only a handful of banks in this country and they will have continuing business relationships with the top firms—PricewaterhouseCoopers Deloitte Anderson Lloyd Caudwell—and I am sure that the Minister in the chair Pete Hodgson knows their names. This is a serious concern that was put forward by those firms during the select committee process and I am unsure as to why this matter was ignored during that process.