Street Maryan: Insolvency Law Reform Bill — First Reading 
Street Maryan: Insolvency Law Reform Bill — First Reading 
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MARYAN STREET (Labour) 
: 
 It is my pleasure to support the introduction and first reading of the Insolvency Law Reform Bill. I welcome the comments made by my honourable colleague who spoke just before me regarding the support of the National Party for the introduction of this bill. Clearly it is time to review the Insolvency Act—an Act that is nearly 40 years old. Other amendments to additional legislation—namely the Companies Act of 1993—have followed from that review. 
The circumstances in which businesses and individuals conduct their business have altered substantially since the 1960s—and indeed since 1993. It is time to modernise our insolvency regime. The Minister has referred already in her speech to the key provisions and benefits of this bill. They relate to the personal bankruptcy procedure the no-asset procedure companies in financial distress cross-border insolvency and abuses arising from the efforts of phoenix companies to defeat creditors’ legitimate interests. 
I wish to focus in the short time I have on a couple of issues in particular. The first is the policy intention of this bill. The first intention is to modernise and streamline our personal insolvency procedures while keeping intact fundamental principles of insolvency law. This bill provides for individual debtors to engage in a voluntary administration regime to enter a no-asset procedure to spend less time in bankruptcy—that time is reduced from 3 years under current provisions as I understand it to 1 year under this bill—and to be able to recover more quickly from their errors. 
In all of this the rights of creditors need to be protected as well. Because the no-asset procedure is a one-off reprieve for small-time debtors who have got themselves into difficulty criteria must be met. These are that such people have no assets from which to repay debt that their total debts are between $1000 and $40000 that they have no other means to repay any amount and that they have a clean financial record—which means that they have not previously been declared bankrupt or admitted to the no-asset procedure. This is not a way out of bankruptcy for repeat incompetents; it is a way back for individuals who have got into difficulties. 
The second area I want to focus on in particular is that pertaining to companies in distress. Again the policy intention is important. We all know of companies considered to have been good traders that have got into trouble with their cash flow. In order to address the issues around the rehabilitation or reconstruction of these companies we need once more to balance the interests of creditors and debtors. That balancing is at the heart of this bill. Phoenix companies—so named because they rise from the ashes of past failed companies and use their previous name or a name like it—must not be allowed to defeat creditors’ interests. But providing some means of rehabilitation for these companies so that they are able to re-enter the economic arena having satisfied obligations adequately and fairly is an important provision in this bill. 
In addition to those two areas I think the work in this bill that seeks to promote international cooperation in relation to cross-border insolvency is important. It seems to me that the key points of this bill are to do with balance modernisation and alignment of New Zealand’s processes with comparable ones overseas—and Australia’s processes in particular are referred to in the introduction to this bill. But more important best practice must be observed. We have an interest in protecting creditors for sure. We have an interest also in modernising our procedures in order to enable individuals and businesses to get back on their feet get up and trading and get back into economic activity on a sound and accountable basis. 
 Like the speaker before me I welcome the referral of this bill to the Commerce Committee. I particularly look forward to the Inland Revenue Department’s submission to the committee because I think that that department will have items of significance relating to past business practices that will be important. But most of all I look to have this essential piece of law reform which seeks to update very old legislation that has long since passed its use-by date in business practice brought up-to-date and made to work in the interests of both creditors and debtors.