Commerce Minister Lianne Dalziel today announced Cabinet’s decision to introduce a new negative licensing system for the insolvency profession today, saying it is the final step in the review of the personal and corporate insolvency laws.
Lianne Dalziel says the new system is designed to provide creditors with assurance that insolvency practitioners are competent to undertake this specialised work and capable of maximising returns from financially distressed businesses.
"Negative licensing, which is a light-handed regulatory framework, simply precludes or suspends incompetent or delinquent practitioners, as demonstrated by their prior action or current performance, from operating in the insolvency industry," Lianne Dalziel said.
"The new system will apply to liquidators, administrators and receivers, and will target those practitioners who lack the requisite skill and knowledge to undertake insolvency work competently or who perform poorly in this field of work."
Supporting this new system will be tighter statutory disqualification criteria, and wider court powers to replace a practitioner who has a conflict of interest and lacks independence in a particular insolvency case.
Lianne Dalziel says the negative licensing system is a cost effective method of dealing with the problem of incompetent and poorly skilled insolvency practitioners and was the preferred option arising from the discussion document that had been consulted on earlier this year.
"The small size of the insolvency industry and the small number of insolvency practitioners, for whom concerns about performance have been raised, prompted the government to adopt an appropriate approach that is proportionate to the problem and the size of the industry. I am sure that this will add confidence and certainty to the creditors affected by insolvency."
Lianne Dalziel expects that these reforms will enhance transparency and accountability in the insolvency profession by ensuring that only skilled and competent practitioners are appointed and that the returns to creditors are maximised.
The investigations and enforcement of the new negative licensing system will be managed by the Registrar of Companies.
Contact: Elspeth (Ellie) McIntyre, Press Secretary, ph 04 471 9397 cell 021 227 9397
All Lianne Dalziel's media statements and speeches are at www.beehive.govt.nz/lianne+dalziel