Michael.1
Insolvency and related law and policy, and more

Michael Murray is an Australian author and commentator on corporate and personal insolvency law and related issues, in Australia and internationally. He has a strong law and policy background, is independent of any connections, and his views are his own. He gives no legal advice. 

New Zealand’s bankruptcy monopoly – an MP’s parting comments

The New Zealand Official Assignee administers all personal insolvencies; it shares the administration of corporate insolvencies with the private sector. A Labour member of the NZ parliament, Mr Raymond Huo, who is retiring at the forthcoming election, had attempted to change this ‘statutory monopoly’ in personal insolvency by way of a private member’s bill.

In his farewell speech, he gave this view of the NZ personal insolvency system, referring to

“the rather unusual dual system in our insolvency law. Personal insolvency is called bankruptcy, while corporate insolvency is called liquidation. The anomaly of that is that individual specialists can be appointed to liquidate a company, but only official assignees, who are salaried public officials, can be appointed to manage bankruptcy. The Law Commission issued a paper in 2001, calling it a statutory monopoly.

Currently, about 34 official assignees employed by the Government administer[ed] less than 1,500 cases a year, operating on a budget of $17 million. Proposed changes under my bill would help save taxpayers’ money and would promote business efficacy and efficiency”.

The 2001 Law Commission paper also recommended that all assetless bankruptcies and liquidations should be administered by the Official Assignee. Where there are assets, creditors should determine whether to appoint a different administrator. [This is similar to the UK system].

Oversighting this would be a new regulatory figure, an Inspector-General in Insolvency who would have responsibility for all investigations and prosecutions, including director disqualifications, and responsibility for overseeing office-holders, including the Official Assignee [again, similar to the UK system]. All this was to be unless further policy work suggested “better solutions to the problems identified”.

None of this seems to have been implemented but the issues raised in the Law Commission paper, including about the proper role of the state in insolvency, remain very relevant.

 

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