Young Jonathan: Insolvency Amendment Bill — In Committee 
Young Jonathan: Insolvency Amendment Bill — In Committee 
[Volume:655;Page:5075] 
JONATHAN YOUNG (National—New Plymouth) 
: 
 When things go wrong in business as they sometimes do good law exists to help minimise the flow-on effect of one person’s disaster becoming another person’s disaster. As we have just heard there has been an increase in insolvencies in our nation. Unfortunately like a stack of falling dominoes we sometimes see the knock-on effects of financial disaster come to people. The Insolvency Act is just such legislation to protect as much as possible the people who may be affected by the business failure of others. 
The Insolvency Amendment Bill was introduced by the Minister of Commerce the Hon Simon Power back in March 2009 to amend the Act. In this amendment bill a number of areas are being attended to. The bill proposes to make changes. More specifically the changes proposed relate to the no-asset procedure; insolvent gifts which I will speak on this evening; and the bankruptcy public registers under the Act. 
The no-asset procedure is not a “get out of jail free” card. Certainly this amendment bill is being presented to the Committee to ensure that it is not such a “get out of jail free” card. Although the no-asset procedure is a softer option for people who encounter insolvency for the first time and provides a one-off opportunity for people who go through financial distress to avoid the stigma of bankruptcy and to rebuild their financial lives as the bill is presented their names will be recorded on the insolvency register not only for the duration of time they are under the no-asset procedure but also for a further 4 years after final discharge. So there is accountability for people who go through such financial duress. 
Many people who go about their business arrangements and who are seeking to make a living particularly in times such as these can lack business experience. As the previous speaker Clare Curran mentioned the bill concerns not only young people but also elderly people who perhaps are concerned about their retirement income. Activities can be entered into without due prudence and business awareness. It is important that people who are going to engage with people in business have the surety of confidence in their credit standing and their business procedures. People may go to the insolvency register and search this information out. 
This bill covers three areas: fraudulent debts the discharge period under the no-asset procedure and insolvency gifts which I want to touch on very briefly. When a person or company is in financial difficulty an unscrupulous person may attempt to remove assets that would otherwise be sold to pay a creditor. They might gift money land a vehicle or some goods that have realisable value. They might sell an asset to a friend or family member for a nominal amount far less than its commercial value in order to prevent that asset from being sold and the proceeds being given to a creditor. When the cupboard is bare they will say to the creditors that they have no assets to sell in order to pay the creditors and then seek to enter into a no-asset procedure. This amendment bill gives further powers to investigate a person who is entering a no-asset procedure solution simply because provisions such as the no-asset procedure could be abused by unscrupulous people who want to get out of jail free but obviously at a creditor’s cost. 
The bill seeks to revert to the provisions in the Insolvency Act 1967 around gifts made in the 5 years prior to becoming bankrupt. These provisions put the onus of proving the debtor was solvent at the time of the gift on to the recipient rather than the official assignee. Thank you Mr Chairman.