Licensing needed to improve conduct when businesses stop trading
Commerce and Consumer Affairs Minister Kris Faafoi has moved to tighten conduct when businesses fold by tabling a Supplementary Order Paper to the Insolvency Practitioners Bill.
Mr Faafoi says the registration regime contained in the current Bill is inadequate and will not stop unsatisfactory practitioners – including liquidators, administrators and receivers - from participating in the market.
“Unfortunately, some providers of insolvency services fall well short of the standards of integrity and skill the New Zealand public is entitled to expect.
“Some liquidators fail to protect the interests of creditors, for example, by turning a blind eye when directors have taken assets out of the company under value prior to liquidation.
“So to protect the interests of those who may be owed money, and ensure the right actions are taken we are going to act. Licensing is needed to make it much more difficult for unqualified or unprofessional individuals to enter the industry and provide a fully effective means for removing practitioners who are not up to the required standard.”
Mr Faafoi says the measures are needed because insolvency practitioners play a vital role in the New Zealand insolvency system, and they need to perform that role professionally and ethically.
“They must be honest, competent, have a good understanding of the principles and practices of corporate insolvency law and the professional judgment to make high quality decisions. There is no place in the industry for dishonest, unprofessional and incompetent people. Licensing will also provide for general standards of insolvency practice to improve over time.”
Subject to other government legislative priorities, the Insolvency Practitioners Bill will be enacted in 2019. More information can be found here.