More than two years after the Commerce Committee reported back on the Insolvency Practitioners Bill, Parliament took up the second reading of the Bill late last week – the next step in what has been a long and protracted process.
The original Bill proposed a negative licensing regime, under which the Registrar of Companies would have the power to prohibit individuals from acting as insolvency practitioners.
The Commerce Committee changed this to a registration system, but without requiring insolvency practitioners to have any minimum qualifications or experience. This means that people will be able to hold themselves out as "registered insolvency practitioners", implying that they meet a minimum standard of proficiency – even though they may not be qualified at all.
As a result, the Bill has been the subject of widespread criticism, and INSOL New Zealand and NZICA have proposed an alternative initiative for self-regulation by the industry.
All eyes have therefore been on the government's response to the Commerce Committee's report. In the second reading, the Minister of Commerce said that the government supports the Commerce Committee's recommendation for registration.
The Minister also said that a "substantial amount of work has been going on behind the scenes since the Bill was reported back from the select committee", and that the government will be introducing a supplementary order paper that proposes further amendments to the Bill.
Interestingly, although the Minister did not specifically address the criticism of the Bill, he said that it is "especially important" that investors and creditors have confidence that "the insolvency practitioner has the minimum skills for the job". Given that the current Bill sets no minimum skill level, it remains to be seen whether the supplementary order paper will address this issue.
Progress, however, continues to be slow. Although 12 speeches are scheduled for the second reading of the Bill, debate was interrupted half way through the third speech. We will continue to monitor progress on the Bill, and keep you updated.