Just as India has introduced co-regulation of its new breed of insolvency practitioners, so has New Zealand acted on a recent recommendation to introduce a co-regulatory licensing regime, both along the English model. Australia is now the odd country out in this area, despite the changes commencing in March 2017.
This follows a recent recommendation in NZ that rejected the Australian model of regulation. The NZ government has acted promptly although the history is based on long inattention to this area of reform in NZ, with the Insolvency Practitioner’s Bill languishing for some years.
The new law will be supplemented by changes to add to the existing limited list of automatic practitioner disqualifications; provide the High court with means to disqualify practitioners; “increase the difficulty in which debtor friendly liquidators can be appointed” (if conceding such liquidators exist is a wise acknowledgment), and to avoid the transfer of company assets once a liquidation application has been filed.
The Insolvency Practitioner’s Bill, currently in the House, will be amended accordingly, along with other laws.
As I wrote earlier, Australia and other countries will be relieved that New Zealand has now acted to reform this area. NZ was a real outlier in international insolvency regulation.
From a cross-border perspective, Australian courts will no longer have to ‘recognise’ NZ insolvencies under the Model Law handled by unqualified NZ liquidators.
The NZ model appears to be based on both the English and the new Indian model. It does require professional bodies of substance, who themselves maintain high standards of competency, independence and transparency, in particular in relation to their registration of members and member discipline regimes.
Australia is now on the outer in this area, though with a focused experienced regulator, applying modern regulatory approaches, our system could work well. It would need to be supplemented only by the various professional bodies with which IPs in Australia are connected. The Insolvency Law Reform Act 2016 introduces some limited co-regulation, but, according to recent submissions to government, with some concerns about how this is to be achieved.