The submission of RITANZ of 7 September 2018 on the proposed Insolvency Practitioners Bill presently before the NZ parliament raises a number of issues of interest to Australia’s practitioners and its insolvency laws.
RITANZ is a professional industry body with over 450 members throughout New Zealand, of which approximately 100 members have been granted the status of Accredited Insolvency Practitioner (AIP) who administer formal insolvency appointments subject to accreditation criteria. That accreditation and self-regulation regime was established jointly by CAANZ and RITANZ.
Co-regulation and licensing regime
RITANZ’s submission supports the Bill generally, including in particular the introduction of a new co-regulation and licensing regime for IPs under the Bill. The submission notes that both RITANZ and CAANZ have already invested significant resources establishing their own regime, saying it will therefore be cost effective to use that existing AIP framework in the new licensing regime.
However, RITANZ does not consider that either body should be expected to contribute further to the costs of implementing this system.
The costs of regulation were at one stage proposed to be met by a $2.50 levy on each NZ company registration.
No new powers needed
RITANZ submits that the proposed new voidable transaction powers regarding dispositions of property in the period whilst an application for liquidation is pending may not be necessary given the existing remedies available to a liquidator.
Refined IP reporting obligations
As to new IP reporting obligations, in relation to “serious problems” of the insolvent company, RITANZ expresses concern that
“it is important to ensure that the reporting thresholds are not set so broadly as to require liquidators, receivers and administrators to spend creditors’ money conducting investigations to determine whether they “believe” or “consider” that an offence or breach of duty has been committed. … such investigations are not the primary duty of the insolvency practitioner and therefore the new requirements … should not overburden the insolvency estate with compliance”.
RITANZ also submits that to avoid overburdening IPs with enquiries as to which authority may be responsible for investigating or enforcing a particular matter which is intended to be the subject of a “serious problem” report, the law should allow the insolvency practitioner to report to the Registrar of Companies. It would then be the responsibility of the Registrar to inform any other appropriate bodies, such as the NZ Police, FMA or the Reserve Bank of New Zealand as required.
Declarations of independence
RITANZ agrees that the transparent disclosure of interests (independence) statements supports public confidence in insolvency practitioners.
“This is because the disclosure ensures that creditors are aware of all relationships (and real or perceived conflicts of interest) and understands why the practitioner nevertheless remains independent. As such the expanded interest statements can inform voting at any creditors’ meeting held to approve or remove such practitioner from the role of administrator or liquidator”.
The RITANZ Code of Conduct provides for all practitioners (other than receivers) to complete a declaration of independence upon appointment and to provide it to the creditors. The RITANZ form has much in common with the proposed expanded interests statements as provided for in the Bill. RITANZ says it intends to harmonise the requirements of its declaration with the required content of interests statements when the Bill comes into effect as law.
“Investigative accountant” exception
A proposed exception to IP disqualification is aimed at allowing pre-appointment “investigative accountant” type work by practitioners. Investigation or advice on the “solvency” of the relevant company under the Bill is said to be too narrow; rather the exception should extend to a person appointed to “investigate, monitor, or advise on the affairs” of the company.
The RITANZ submission is worth close reading. The Bill remains before the NZ parliament.