Insolvency Act 2006

  • This version was reprinted on 23 May 2016 to make corrections to section 235 and Schedule 2 under section 25(1)(j)(ii) and (iii) of the Legislation Act 2012.

Reprint as at 24 March 2016

Coat of Arms of New Zealand

Insolvency Act 2006

Public Act
 
2006 No 55
Date of assent
 
7 November 2006
Commencement
 
see section 2
Note

Changes authorised by subpart 2 of Part 2 of the Legislation Act 2012 have been made in this official reprint.

Note 4 at the end of this reprint provides a list of the amendments incorporated.

This Act is administered by the Ministry of Business, Innovation, and Employment.

Contents

1Title
2Commencement
3Interpretation
4Rights and powers under other Acts not affected
5Act binds the Crown
6Corporations and other entities not subject to Act
7Nature of bankruptcy
8Alternatives to bankruptcy
9Introduction to subpart 2
10Adjudication
11Adjudication by court
12Adjudication on debtor’s initiative
13When creditor may apply for debtor’s adjudication
14Application by secured creditor
15Court’s permission required for withdrawal of application
16Requirement of act of bankruptcy
17Failure to comply with bankruptcy notice
18Disposition of property to trustee for benefit of creditors
19Fraud or intent to prefer a creditor
20Departure from New Zealand
21Avoidance of creditors
22Notice of suspension of debts
23Admission to creditors of insolvency
24Possession under execution process
25Writ of sale
26Return that sufficient goods not found under execution process
27Removal or concealment of property
28Unsatisfied judgment for non-payment of trust money
29Form of bankruptcy notice
30Effect of overstatement of amount owing
31Creditor’s execution process must not be issued or continued
32Execution processes by other creditors
33Execution process issued by another court
34No restriction on execution process if application for adjudication withdrawn or dismissed
35Meaning of execution process
36Court may adjudicate debtor bankrupt
37Court may refuse adjudication
38Court may halt application
39Orders if more than 1 application
40Orders if more than 1 debtor
41Order that disposition or proposal not act of bankruptcy
42Halt or refusal of application when judgment under appeal
43Court may halt application while underlying debt determined
44Substitution of creditor
45When debtor may file application
46Debtor must first file statement of affairs
47Debtor automatically adjudicated bankrupt
48Debtors’ joint application
49Steps for filing debtor’s application
50Application for appointment of Assignee as receiver
51Additional orders after receiver’s appointment
52Appointment of Assignee as receiver and manager must be advertised
53Execution process halted
54Effect when execution process halted
55Bankruptcy commences on adjudication
56Date of adjudication
57Date and time of adjudication must be recorded
58Registrar must notify Assignee of adjudication by court
59Official Assignee must nominate Assignee
60Presumption that act or transaction entered into or effected after adjudication
61Adjudication final and binding
62Public register of discharged and undischarged bankrupts
63Debtor adjudicated bankrupt called the bankrupt
64Outline of what happens on adjudication
65Assignee must advertise adjudication
66Order that Assignee must not advertise pending appeal or application for annulment
67Bankrupt must file statement of affairs with Assignee
68Notice that bankrupt must file statement of affairs
69Time for filing statement of affairs
70Bankrupt may file additional or amended statements or answers
71Assignee must call meeting of creditors
72Time when meeting must be held
73Assignee may dispense with first creditors’ meeting
74Notice that first creditors’ meeting should not be called
75Documents to be sent with notice of meeting
76Effect of adjudication on court proceedings
77Execution process must not be begun or continued after adjudication advertised
78Effect of bankrupt’s death after adjudication
79Overview of creditors’ role in bankruptcy
80Types of creditors’ meetings
81Subsequent meetings
82Meeting and resolution not defective for lack of notice
83Chairperson
84Chairperson may adjourn meeting
85Assignee must report to meeting
86Attending creditors’ meeting
87Bankrupt may be required to attend and be questioned
88Attendance by non-creditors
89Minutes and record of meeting
90Number of persons for valid meeting
91Who may represent creditor or bankrupt
92Voting at meetings
93Postal and electronic votes
94Who may vote at creditors’ meeting
95When secured creditor may vote
96When creditor under bill of exchange or promissory note may vote
97Person disqualified from voting through preferential effect
98Creditor of partner
99Creditors may appoint expert or committee to assist Assignee
100Creditor’s right to inspect documents
101Status of bankrupt’s property on adjudication
102Status of property acquired during bankruptcy
103Property vests in replacement Assignee
104Property held in trust by bankrupt
105Effect of other laws
106Court may order that money due to bankrupt is assigned to Assignee
107Application of section 274 to payments by bankrupt or assignments by court
108When execution creditor may retain execution proceeds
109Effect of notice to sheriff of adjudication
110Sheriff must retain proceeds of execution for 10 working days
111Purchaser under sale by sheriff acquires good title
112Court may set aside rights conferred on Assignee
113Transaction in good faith and for value after adjudication
114Executions and attachments in good faith
115When execution or attachment completed for purposes of section 108 or 114
116Assignee’s interest in property passes
117Assignee may disclaim onerous property
118Effect of disclaimer
119Position of person who suffers loss as result of disclaimer
120Assignee may be required to elect whether to disclaim
121Liability for rentcharge on bankrupt’s land after disclaimer
122Transmission of interest in land
123Assignee cannot claim interest in land if bankrupt remains in possession until discharge
124Assignee may transfer shares and other securities
125Assignee may disclaim liability under shares
126Assignee may be required to elect whether to disclaim liability under shares
127Transfer of shares after disclaimer
128Company may prove for unpaid calls
129Meaning of hire purchase terms used in this subpart
130Restrictions on creditor dealing with consumer goods
131Assignee’s powers in relation to hire-purchase consumer goods
132Creditor in possession of consumer goods may prove in bankruptcy if Assignee has not exercised powers
133Creditor may assign consumer goods to Assignee
134Status of bankrupt’s property on second bankruptcy
135Effect of notice to Assignee of application for adjudication
136Separate accounts
137How joint and separate estates must be applied
138General duty of bankrupt
139Bankrupt must disclose property acquired before discharge
140Bankrupt must deliver property to Assignee on demand
141Bankrupt must take all steps required in relation to property and distribution of proceeds to creditors
142Bankrupt must give Assignee accounting records and other documents
143Bankrupt must give Assignee information relating to property
144Bankrupt must give Assignee information relating to income and expenditure
145Bankrupt must notify Assignee of change in personal information
146Bankrupt must give Assignee financial information
147Bankrupt may be required to contribute to payment of debts
148Onus of proof if bankrupt defaults in making payment
149Prohibition of bankrupt entering business
150Warrant to search for and seize bankrupt’s property
151Seizure of bankrupt’s property
152Bankrupt must vacate land or buildings if required to do so
153Bankrupt’s right to inspect documents
154No power to recover property or give release or discharge
155No steps to defeat beneficial interest
156Bank must notify Assignee of bankrupt’s account
157Assignee may require bank to search account records
158Bankrupt may retain certain assets
159Bankrupt may retain certain assets with consent of creditors
160Retention of assets does not affect rights under charge or hire purchase agreement
161Retention provisions do not confer rights to other assets
162Relative or dependant may exercise bankrupt’s right to retain assets
163Assignee may make allowance to bankrupt
164Assignee may allow bankrupt to retain money
165Assignee may summon bankrupt and others to be examined
166Conduct of examination of person summoned by Assignee
167Expenses of person summoned by Assignee
168Creditor may inspect record of examination
169Report of examination must not be published unless court consents
170Examination provisions also apply when Assignee appointed receiver and manager of debtor’s property
171Assignee may obtain documents
172No lien over bankrupt’s documents and other records
173Court must hold public examination if Assignee or creditors require
174Notice of examination
175Time for holding examination
176Assignee must file report before examination
177Conduct of examination
178Record of examination
179When examination ends
180Bankrupt’s failure to attend examination
181Bankrupt’s expenses in attending examination
182Assignee may examine company documents, personnel, and shareholders
183Meaning of associate
184No privilege against self-incrimination
185Statement made by person examined or questioned not generally admissible in criminal proceedings against that person
186Representation
187Assignee may continue or disclaim bankrupt’s contract
188Contract terminated by other contracting party
189Payment of money or delivery of property is good discharge
190Bankrupt’s co-contractor may sue and be sued
191Lawyers’ costs
192Overview of subpart 7
193Extension of 2 years and 6 months periods
194Insolvent transaction may be cancelled
195Meaning of insolvent transaction
196Insolvent transaction presumed
197When series of transactions must be regarded as single transaction
198Insolvent charge may be cancelled
199Charge for new consideration or charge in substitution not affected
200Presumption that bankrupt unable to pay due debts
201Charge for unpaid purchase price given after sale of property
202Appropriation of payments by bankrupt to secured creditor
203Charge agreed before specified period may not be cancelled
204Insolvent gift within 2 years may be cancelled
205Insolvent gift within 2 to 5 years may be cancelled if bankrupt unable to pay debts
206Procedure for cancelling irregular transactions
207Court may order retransfer of property or payment of value
208Limits on recovery
209Recovery by appointee
210Land Transfer Act 1952 does not limit sections 206 to 209
211Assignee may recover difference in value
212When Assignee may recover difference
213Court may order recipient to pay value to Assignee
214Court’s powers in relation to bankrupt’s contribution to recipient’s property
215How Assignee must use repayment of bankrupt’s contribution to property
216Land Transfer Act 1952 does not limit sections 213 to 215
217Assignee’s general powers
218Assignee must not sell bankrupt’s property before first creditors’ meeting
219Title of purchaser from Assignee
220Obligation to bank and power to invest money
221Assignee may assign right to sue under this Act
222Proceedings by Assignee when bankrupt is partner in business partnership
223Means of giving notice to creditors
224Assignee’s discretion
225Assignee may apply for directions by court
226Appeal from Assignee’s decision
227Assignee must keep proper accounting records
228Assignee’s final statement of receipts and payments
229Auditor-General may audit Assignee’s accounts
230Assignee may return or destroy accounting records
231Meaning of provable debt
232What debts are provable debts
233Creditor must submit creditor’s claim form
234Assignee must examine creditor’s claim form
235Assignee must give creditor notice of grounds of rejection
236Assignee’s power to obtain evidence of debt
237Notice to Assignee to admit or reject creditor’s claim
238Court may cancel creditor’s claim
239Court may reverse or modify Assignee’s decision rejecting creditor’s claim
240Parties to application to court in relation to creditor’s claim
241Which court may hear application in relation to creditor’s claim
242Court may make order as to costs
243Secured creditor’s options in relation to property subject to charge
244Assignee may require secured creditor to choose option
245Assignee not required to act in relation to certain property subject to charge
246Realisation of property subject to security
247Valuation of charge and proof for balance due
248False claim by secured creditor
249Assignee’s powers when secured creditor values property subject to charge and proves for balance
250Secured creditor who surrenders charge may withdraw surrender or submit new creditor’s claim
251Assignee may estimate amount of uncertain creditor’s claim
252Application to court to determine amount of uncertain creditor’s claim
253Creditor’s claim payable 6 months or more after adjudication
254Mutual credit and set-off
255Definitions relating to set-off under netting agreement
256Application of set-off under netting agreement
257Calculation of netted balance
258Mutuality required for transactions under bilateral netting agreements
259When mutuality required for transactions under recognised multilateral netting agreements
260Application of set-off under section 254 to transaction subject to netting agreements
261Transactions under netting agreement and insolvent transactions
262Set-off under netting agreement not affected by notice under section 206(2)
263Disclaimer of onerous property and termination of netting agreement not permitted
264Pre-adjudication interest
265Post-adjudication interest at prescribed rate if surplus remains
266Additional post-adjudication interest on contract or judgment debt if surplus remains
267Meaning of prescribed rate
268Creditor must deduct trade discounts
269Proof when charge void
270Judgment creditor may prove for costs
271Company may prove for unpaid calls
272When guarantor for bankrupt may prove
273Priority of payments for distribution of bankrupt’s assets
274Priority of payments to preferential creditors
275Conditions to priority of payments to preferential creditors
276Provisions concerning preferential payments to employees
277Subrogation of persons if payment has been made
278Priority given to person who distrains on goods
279Creditors to have priority over creditors of joint bankrupt
280Payment of remaining money to general creditors
281Payment of surplus to bankrupt
282Definition of undistributed money
283Undistributed money to be paid to Public Trust
284Public Trust to hold undistributed money
285Public Trust to pay undistributed money to bankruptcy surplus account
286Application of undistributed money held in bankruptcy surplus account
287Requisition of Minister required for payment under section 286(c)
288Approval of Official Assignee required for payment under section 286(d)
289Matters concerning bankruptcy surplus account
290Automatic discharge 3 years after bankrupt files statement of affairs
291Effect of automatic discharge
292Objection to automatic discharge
293Objection may be withdrawn
294Bankrupt may apply for discharge
295When bankrupt must be examined concerning discharge
296Assignee’s report
297When creditor must give notice of opposition to discharge
298Court may grant or refuse discharge
299Court may restrict bankrupt from engaging in business after discharge
300Court may reverse order of discharge
301Grounds for reversing discharge
302Effect of reversal of discharge
303Bankrupt may apply for absolute discharge if conditions of discharge too onerous
304Debts from which bankrupt is released on discharge
305Discharge conclusive evidence of bankruptcy
306Discharge does not release partners and others
307Discharged bankrupt must assist Assignee
308Information regarding bankrupt’s discharge must be contained in public register maintained under section 62
309Court may annul adjudication
310When Assignee may annul adjudication
311Effect of annulment
312Creditors may accept composition by passing preliminary resolution
313Confirming resolution
314Compositions with members of partnership
315Court must approve composition
316Procedure for court approval of composition
317Deed of composition
318Effect of deed
319Bankrupt remains liable for unpaid balances of certain debts
320Deadlines for steps to approve composition and execute deed
321Procedure following court approval of composition
322Enforcement of composition
323Court’s exclusive jurisdiction
324Law and practice in bankruptcy applies to deed
325Meaning of debt, etc
326Insolvent may make proposal
327Form of proposal
328Proposal must be filed in court
329Provisional trustee
330Provisional trustee must call meeting of creditors
331Procedure at meeting of creditors
332Who may represent creditors
333Court must approve proposal
334Effect of court approval
335Creditor must not take enforcement steps without court’s permission
336Duty of insolvent
337Duties of trustee
338Trustee must file 6-monthly summary of receipts and payments
339Cancellation or variation of proposal
340Summary instalment order
341Who may apply for order
342Form of application
343Assignee may make summary instalment order
344Additional orders
345Appointment of supervisor
346Role of supervisor
347Assignee may require supervisor or past supervisor to provide documents
348Termination of appointment for failure to supervise adequately
349Period of instalments
350Variation or discharge of order
351Effect of order
352Proceedings against debtor
353Supervisor must give notice of summary instalment order to creditors
354Public register of debtors subject to current summary instalment order
355Meaning of current summary instalment order
356Creditor’s claim
357Payment of debtor’s earnings to supervisor
358Distribution of money paid by debtor
359Default by debtor
360Offence of obtaining credit
361Introduction to this subpart
362Application for entry to no asset procedure
363Criteria for entry to no asset procedure
364Debtor disqualified from entry to no asset procedure in certain cases
365Assignee must notify creditors
366Restrictions on debtor obtaining credit after application made
367When debtor admitted to no asset procedure
368Public register of persons admitted to no asset procedure
369Creditors may not enforce debts
370Debtor’s duties after entry to no asset procedure
371Offence of obtaining credit
372Termination
373When Assignee may terminate
374Assignee may apply for preservation order
375Effect of termination
376Creditor may apply to Assignee for termination
377Time of discharge
377AEffect of discharge
377BDischarge does not release partners and others
378Interpretation
379Court may order that estate be administered under this Part
380Application by administrator, etc
381Application by creditor or beneficiary for order under this Part
382Notice of application by creditor or beneficiary
383When Registrar may hear application
384Costs of application
385Court may order administration by Assignee or Public Trust
386Certificate filed by Public Trust or Māori Trustee has effect as application and order
387Estate vests in appointee
388Appointee must realise, administer, and distribute estate
389Entitlement of surviving spouse to household furniture and effects
390Appointee may make allowance to surviving spouse
391Sections 392 to 398 apply in respect of estate administered under this Part
392Appointee’s authority, powers, and functions
393Distribution of estate
394Payment of surplus
395Creditor’s notice to administrator
396Appointee may act in relation to deceased’s irregular transactions
397Appointee may cancel execution
398Administrator’s acts valid before notice
399Appointment of Official Assignee for New Zealand and others
400Assignee may act on behalf of another Assignee
401Assignee’s use of name, seal, etc
402Assignee’s additional rights and remedies
403Disqualification of Assignee
404Vacation of office by Assignee
405Protection of Assignee
406Assignee’s remuneration
407Rates of Assignee’s remuneration
408Assignee must apply for order of release
409Effect of order
410Subsequent order of release
411Jurisdiction and powers of court
412Court may look at real nature of transaction
413When Registrar or District Court Judge may exercise powers and jurisdiction of court
414Rehearings and appeals
415Proceedings not halted pending appeal
416Suspension of adjudication pending appeal
417Court may extend time
418Defects in proceedings
419Offences in relation to debts
420Offences in relation to property
421Offence in relation to written statement to creditor, etc
422Offence in relation to documents, etc
423Offence in relation to fictitious losses or expenses
424Offences in relation to credit, etc
425Offences in relation to obtaining consent of creditors
426Offence in relation to leaving New Zealand
427Defence of absence of intent
428Penalties for offences under sections 419 to 426 by bankrupt
429Failure to keep and preserve proper record of transactions
430Failure to keep proper records with intent to conceal
431Penalties for offences relating to records
432When bankrupt deemed not to have kept or preserved proper record
433Offences in relation to Assignee
433AOffence in relation to obtaining credit
434Defences to offence of obtaining credit
434ALimitation period for offences against section 433 or 433A
435Penalty for offences under sections 433 and 433A
436Offence by bankrupt in relation to management of companies
437Penalties for offence in relation to management of companies
438Assignee may prosecute if reasonable grounds certified by Crown Solicitor
439Assignee has immunity for prosecution if certificate given by Crown Solicitor
440False or misleading statements or refusal to answer questions
441Regulations
442Rules
443Repeal and revocation
444Transitional provisions
445Consequential amendments to other enactments
445AAct subject to application of Cape Town Convention and Aircraft Protocol
446Subpart applies to public register maintained under section 62, 354 or 368
447When public register must be accessible
448Purposes of public registers
449General information that must be held in public registers
449AInformation kept indefinitely on public register after multiple insolvency events
450Restricted information that may be held in public register maintained under section 62
451When Assignee may omit, remove, restrict access to, or amend, information contained in public registers
452Search of public registers
453Search criteria
454Search purposes
455Information contained in public registers may be used for statistical or research purposes
456When search breaches information privacy principle
457Crown and Assignee not liable for act or omission
Reprint notes