Dalziel Lianne: Insolvency Bill Companies Amendment Bill Insolvency (Cross-border) Bill — Third Readings 
Dalziel Lianne: Insolvency Bill Companies Amendment Bill Insolvency (Cross-border) Bill — Third Readings 
[Volume:634;Page:6171] 
Hon LIANNE DALZIEL (Minister of Commerce) 
: 
 I move  
That the Insolvency Bill the Companies Amendment Bill and the Insolvency (Cross-border) Bill be now read a third time 
. These bills repeal and replace the Insolvency Act 1967 amend and add to the corporate insolvency provisions in the Companies Act 1993 and create new legislation on cross-border insolvency. These bills are designed to provide for an insolvency regime that is simple predictable and efficient to administer without imposing unnecessary compliance and regulatory costs on its users. It is designed to promote innovation— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Would members leaving the Chamber please show some courtesy to the member trying to address it. It is common courtesy. Thank you. 
Hon LIANNE DALZIEL 
: These bills are designed to promote innovation responsible risk-taking and entrepreneurialism by not excessively penalising business failure. They are designed to distribute the proceeds to creditors in an equitable manner and in accordance with their relative pre-insolvency entitlements. They are designed to maximise returns to creditors by providing flexible and effective methods of insolvency administration and enforcement that encourage early intervention when financial distress first becomes apparent. They are designed to enable individuals in bankruptcy to participate fully again in the economic life of the community. Finally they are designed to promote international cooperation in relation to cross-border insolvencies. 
These bills represent an important step in the Government’s economic transformation agenda. They promote business investment greater innovation and economic growth by providing effective and efficient ways to deal with the financial failure of both individuals and companies. More specifically the Insolvency Bill makes the personal bankruptcy procedure undertaken by the official assignee more administratively efficient and cost-effective. It is also designed to provide debtors with better access to the bankruptcy regime and alternative bankruptcy procedures in times of financial difficulty with the ultimate goal of maximising returns to the creditors. 
The Insolvency Bill also introduces an alternative to personal bankruptcy known as the no-asset procedure which is aimed at consumer debtors. Many of the punitive aspects of bankruptcy such as restrictions on overseas travel and on owning a business are not applicable to consumer debtors. This 12-month procedure for forgiving debt is a once-only chance for consumer debtors. I believe it will make those who offer credit to individuals who are unlikely to repay it much more cautious about doing so. I am disappointed that the National Party extends the principle of personal responsibility only to those who end up in unmanageable debt and not to those who extend credit without undertaking appropriate steps to secure their interest. 
The Companies Amendment Bill adopts the Australian voluntary administration regime for companies in financial distress. This regime is an alternative to liquidation. It allows for a moratorium period for the administrators to assess the viability of the company to continue trading before making a decision to either rehabilitate the company by placing it in voluntary administration or enter into liquidation proceedings. If a decision to rehabilitate the company is made a deed of company arrangement is executed between the company and its creditors which forms the basis of the administration and contains details of creditors the amount of debt and the time over which the debt is to be repaid. Essentially this allows a company to have a voluntary plan to continue trading while managing its debts. Even if that is unsuccessful in terms of resolving the matter and a liquidation follows evidence from Australia shows that the returns to creditors are indeed greater than they would be otherwise. 
Opposition members spent most of their time on the involuntary administration sections of the bill due to the provisions that maintain the Crown’s priority as a preferential creditor in the bill. I wish to reiterate a couple of points. First the Inland Revenue Department is an involuntary creditor. It does not have a choice about which entities it deals with. It cannot secure its interests in any way other than through the preference. Secondly PAYE GST resident and non-resident withholding tax child support and student loan payments are all collected on behalf of the department. 
Opposition members did not spend time talking about the Australian-style director penalty notice provisions that have replaced the Crown’s preferential creditor status in Australia. I can only assume that they agree with making the director of a company personally liable for that company’s tax debts if he or she does not take appropriate action to pay the Inland Revenue Department within a certain time period as occurs in Australia. I believe that the case has not been made to warrant such a significant increase in directors’ liability because it would further erode the fundamental concept of limited liability that underpins our company laws. 
Provisions have been introduced in the bills to restrict the abuse of phoenix company structures by directors of failed companies with the intent to defeat the legitimate interests of creditors. The Companies Amendment Bill proposes to restrict the reuse of the failed company name and provides for criminal sanctions where the director has acted in bad faith to defeat creditors’ legitimate interests. The changes proposed in the bill eliminate the potential benefits to directors and therefore provide fewer incentives for directors to abuse phoenix company arrangements. 
Improvements to the law relating to cross-border insolvency are included in the Insolvency (Cross-border) Bill. The bill adopts the United Nations Commission on International Trade Law model law on cross-border insolvency. The model law will provide effective and efficient mechanisms for dealing with cases of cross-border insolvency and debt recovery particularly where assets of the insolvent company are held in an overseas jurisdiction. The model law will not come into force in New Zealand until it is adopted by Australia given that Australia is our largest and closest trading partner. Australia has announced that the United Nations Commission on International Trade Law model law will be included in its corporate insolvency reform bill which is intended for introduction late this year. 
Further changes were made to these bills at the Committee stage in response to issues raised by businesses and other Government departments. Those changes are largely technical in nature and will improve efficiency for those administering the regimes. A number of minor amendments that were necessary to better target some of the provisions and to ensure the efficacy of others are included—for example consequential amendments made as a result of the enactment of the KiwiSaver Act and the extension of the jurisdiction of associate judges to all personal and corporate insolvency matters. 
I commend again the Commerce Committee for its tremendous work in fine-tuning these bills and I thank those who made substantive submissions on the bills. I also thank the officials for their tireless efforts in engaging with the sectors throughout the process. They made it a very open and transparent process and at the same time delivered a discussion document on whether to regulate insolvency law practitioners. And just to use this speech as another little advertising opportunity submissions for the discussion document close on 2 February next year. 
These bills are an important part of the Government’s wider business law reform programme and its economic transformation agenda. They create an appropriate business environment for attracting investors enhancing the integrity of insolvency practitioners and ultimately assisting in economic growth by providing confidence to business investors that sound insolvency regimes are in place to deal with business failures. I commend these bills to the House.