Huo Raymond: Insolvency Amendment Bill — First Reading 
Huo Raymond: Insolvency Amendment Bill — First Reading 
[Volume:653;Page:2019] 
RAYMOND HUO (Labour) 
: 
 I rise to support the Insolvency Amendment Bill. It is a good bill but I do have mixed feelings and to some extent concerns about it. This bill amends the Insolvency Act 2006 by addressing a small number of issues that have arisen since its enactment. Running through the bill’s clause-by-clause analysis I note there are generally four such issues that are addressed. The first one is addressed through the bill’s aim to preserve the integrity of the no-asset procedure by preventing discharge of fraudulent debts. The second one is addressed by allowing the official assignee to extend the no-asset procedure period when an objection is received just prior to a debtor’s expected date of discharge from the no-asset procedure. The third one is addressed by protecting the interests of creditors of bankrupts by restoring the official assignee’s ability to recover gifts made by a person prior to bankruptcy. The fourth one is addressed by amending the public register provisions to extend the period of time that the no-asset procedure will be on the record from 1 year to 5 years and providing for permanent public records where a person has had multiple insolvency events. 
The provisions addressing the fourth issue cause concerns in that these provisions have been added to what would otherwise have been a technical bill. A fundamental question behind those concerns is whether we should have a strong separation between the bankruptcy provisions and the no-asset procedure to make it very clear that a no-asset procedure is a one-off once-in-a-lifetime opportunity for a qualified applicant to have a fresh start. As to the public register we know that the public register’s relation to bankruptcy has been 7 years for many years. The 7 years remains for bankruptcy but this bill seeks to increase the time for having the no-asset procedure on the record not for the 1 year the no-asset procedure is in place currently but for 5 years. Last Sunday in Auckland I had a coffee with one of my former clients who had been helped under the no-asset procedure regime. His initial response to the proposed amendment was “What’s the point?”. Indeed what is the point behind the amendment to increase the time for having the no-asset procedure on the record from 1 year to 5 years? 
There are two further observations originating from the provisions addressing the fourth issue. The first one is that with these provisions being added on it is hard to say that this bill is still a technical bill. The second one is that as the Hon Lianne Dalziel said earlier in this House when we change the provisions around the no-asset procedure it will change the number of people who want to contemplate that regime as an option. I believe that that will affect the fundamental rationale behind the no-asset procedure in the first place. 
What is a no-asset procedure? The Ministry of Economic Development website provides a very people-friendly definition: “Applications are made to the Official Assignee … To qualify for entry you must:”—I am sorry Mr Assistant Speaker; “you” here refers to the applicant not you Mr Assistant Speaker—”have no realisable assets … not previously been admitted to the no asset procedure not previously been adjudicated bankrupt have total debts (excluding student loan) not less than $NZ1000 and not more than $NZ40000 … complete a means test showing you have no means of repaying any amount towards your debts. The Official Assignee can refuse entry into the NAP if: your creditor(s) object to entry or bankruptcy proceedings have been initiated and the likely outcome for the creditor would be materially better if the proceeding continued or you have concealed assets or you have committed an act that would be an offence under the Insolvency Act 2006 were you bankrupt or you have incurred debts knowing you had no means to pay them.” 
 As we can tell certain measures are in place to ensure that no-asset procedure is to be implemented appropriately. The no-asset procedure was introduced as an alternative to bankruptcy under the Insolvency Act 2006. It provides a one-off opportunity for financially distressed individuals to avoid the stigma of bankruptcy and to make a fresh start financially. Of course here a fresh start includes the ability to carry on a business and to travel overseas both of which are prohibited under the bankruptcy provisions. That should be a major difference between bankruptcy and the no-asset procedure. 
A two-tier review of New Zealand’s insolvency laws was initiated in 1999. The review included both personal and corporate insolvency matters and resulted in the enactment of the Insolvency Act 2006 the Companies Amendment Act 2006 and the Insolvency (Cross-border) Act 2006. The Insolvency Act 2006 came into effect on 3 December 2007. When the bill was introduced the no-asset procedure was probably the most debated part of the legislation being a very new procedure. Of course I did not witness how the debate unfolded because I was not here in the House at that time but as a commercial lawyer I can confirm that subsequent to the legislation’s enactment and the putting in place of the no-asset procedure the law firm that I worked for experienced a huge upswing in the number of inquiries. It was a good regime. Again it was designed as a one-off opportunity for someone who had otherwise acted in good faith but who had come across a very poor set of circumstances and hardship in his or her life to get a fresh start. Now an amendment has been proposed despite the fact that the Act is less than 3 years old and the no-asset procedure has been in effect for less than 18 months. 
Therefore I say the first three amendments are fine and they are good amendments but the fourth one causes concern. It causes concern for two reasons. Firstly the amendments in the Insolvency Amendment Bill would otherwise be of a purely technical nature and this would be a good bill. Secondly at this time when there is no shortage of disturbing news from around the world it would be much better for the National Government to focus on preventing more insolvency in New Zealand. Where is the National Government’s plan to prevent insolvency? The International Monetary Fund chief economist has advised world Governments to “commit to do whatever it will take to avoid a Depression . . . Above all adopt clear policies and act decisively. Do too much rather than too little.“ What is the National Government’s economic plan? Certainly it will not help raise our productivity or better prepare New Zealand and New Zealanders for the future if all we can see is nothing but the research and development tax credit scrapped KiwiSaver gutted and the New Zealand Fast Forward Fund trashed. Thank you.