Insolvency and restructuring

New Zealand

In November 2016, Cabinet agreed to amend the Insolvency Practitioners Bill to introduce a co-regulatory licensing regime for insolvency practitioners, as well as 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, including CA ANZ and RITANZ, 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.

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.

Under the proposals, solvent liquidations will be excluded from the licensing regime however they will only be able to be undertaken by lawyers and accountants who are members of a professional body.

The Government is advancing these changes via a supplementary order paper to the Insolvency Practitioner’s Bill, which is currently in the House and can be accessed here.

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: