Insolvency and restructuring

New Zealand

In June 2019, both the Insolvency Practitioners Bill and the Insolvency Practitioners Regulation (Amendments) Bill received Royal Asset  . The Acts will be phased in progressively with full implementation by the end of June 2020.

The Act introduces an insolvency practitioner licencing regime which will come into force in June 2020. The licencing regime will apply to:

• Receiverships under the Receiverships Act 
• Administrations and insolvent liquidations under the Companies Act 
• Insolvents’ proposals under the Insolvency Act.

The Act also introduces a number of additional amendments aimed at further raising the practice standards of insolvency practitioners and ensuring they act in accordance with their statutory duties. The co-regulatory regime will build on the self-regulatory regime introduced by CA ANZ and RITANZ in 2015.

Under the new regime, professional bodies will carry out the frontline regulation and the Registrar of Companies (Registrar) will monitor and report on the adequacy and effectiveness of the frontline regulators’ regulatory systems and processes.

What happens between now and June 2020?

• Regulations will be prepared, consulted on and made
• The Registrar will set the criteria for the accreditation of professional bodies
• One or more professional bodies will apply to the Registrar for accreditation
• The Registrar will set the minimum standards for licensing insolvency practitioners, to be applied by accredited bodies
• Practitioners who might be eligible for a licence but are not Accredited under the CA ANZ/ Restructuring and Insolvency Turnaround Association of NZ (RITANZ) self-regulation regime will apply to an accredited body to become AIPs or licensed insolvency practitioners.

What happens from June 2020 to June 2021?

• For Year One of the statutory licensing regime (June 2020-June 2021), the Accredited Insolvency Practitioners (AIPs) under the CAANZ/RITANZ self-regulation regime will be deemed to be licensed
• These AIPs will need to apply to an accredited body to become licensed insolvency practitioners by October 2020
• Accredited bodies will have until June 2021 to consider those applications and leave time for possible appeals against any adverse decisions.

What happens after that?

• The licensing regime will come into full force in June 2021.

As well as introducing a co-regulatory licensing regime for insolvency practitioners, Cabinet also agreed to amend the Companies Act 1993 and Receiverships Act to:

• Improve the list of automatic practitioner disqualifications
• Provide the High Court with an effective means to disqualify practitioners
• Increase the difficulty in which debtor friendly liquidators can be appointed, and
• Void the transfer of a company's assets once a liquidation application has been filed.

Australia

The Australian government passed the Insolvency Law Reform Act 2016 on 22 February 2016. This made changes to both bankruptcy and corporate insolvency laws. 

The Government has subsequently made reforms that:

• Allow directors of financially distressed businesses a new ‘safe harbour’ to turn around their business free of the worry of being personally pursued for insolvent trading actions; and
• Make certain ipso facto clauses unenforceable so contracts can be terminated in instances of insolvency, when a company is restructuring

Further reforms are currently progressing with the aim to reduce insolvencies by more flexible options to turnaround businesses in crisis.

These include:

• Reducing the bankruptcy period from three years to one - currently before Parliament
• Combatting illegal phoenix activity – currently being consulted on
• Introduction of Director Identification Numbers (DIN) as part of the modernising business registers project
• Addressing corporate misuse of the Fair Entitlements Guarantee – currently being consulted on.

Engagement standards

Members who carry out insolvency and restructuring engagements must follow prescribed standards. These are for New Zealand, IES: Insolvency Engagements. For Australia, APES 330: Insolvency Services

Insolvency Management Committee

We provide a forum for members interested in insolvency through our Insolvency Management Committee. It offers an opportunity to engage in all forms of insolvency regulation, be part of discussions around best practice, and hear about useful tools and resources. It also provides opportunities to collaborate with other relevant professional bodies.

The committee members are as follows: