Insolvency Amendment Act 2009

Crest

Insolvency Amendment Act 2009

Public Act2009 No 52
Date of assent16 November 2009
Commencementsee section 2

The Parliament of New Zealand enacts as follows:

1 Title
  • This Act is the Insolvency Amendment Act 2009.

2 Commencement
  • (1) Section 10 is deemed to have come into force on 10 March 2009.

    (2) The rest of this Act comes into force on the day after the date on which it receives the Royal assent.

3 Principal Act amended

Part 1
Amendments to Insolvency Act 2006

Insolvent gifts

4 New sections 204 and 205 substituted
  • Sections 204 and 205 are repealed and the following sections substituted:

    204 Insolvent gift within 2 years may be cancelled
    • A gift by a bankrupt to another person may be cancelled on the Assignee's initiative if the bankrupt made the gift within 2 years immediately before adjudication.

    205 Insolvent gift within 2 to 5 years may be cancelled if bankrupt unable to pay debts
    • (1) A gift by a bankrupt to another person may be cancelled on the Assignee's initiative if—

      • (a) the bankrupt made the gift within the period beginning 2 years immediately before adjudication and ending 5 years immediately before adjudication; and

      • (b) the bankrupt was unable to pay his or her debts.

      (2) A bankrupt is presumed to have been unable to pay his or her debts for the purpose of subsection (1)(b) unless the party claiming under the gift proves that the bankrupt was immediately after the making of the gift, or at any time after that up to his or her adjudication, able to pay his or her debts without the aid of the property that the gift is composed of.

5 Limits on recovery
  • Section 208 is amended by repealing paragraph (b) and substituting the following paragraph:

    • (b) a reasonable person in A's position would not have suspected, and A did not have reasonable grounds for suspecting, that,—

      • (i) in the case of an insolvent gift, the bankrupt was, or would become, unable to pay his or her debts without the aid of the property that the gift is composed of; or

      • (ii) in the case of any other irregular transaction referred to in section 206(1), the bankrupt was, or would become, unable to pay his or her due debts; and.

6 When Assignee may recover difference
  • Section 212(b) is amended by omitting “due” in each place where it appears.

No asset procedure

7 Criteria for entry to no asset procedure
  • Section 363(2) is amended by adding , but does include any assets (for example, gifted assets) that might be recoverable by the Assignee if the debtor were adjudicated bankrupt on the date of application for entry to the no asset procedure and if the irregular transaction provisions in subpart 7 of Part 3 applied.

8 Effect of termination
  • Section 375 is amended by adding , and the debtor is liable to pay any penalties and interest that may have accrued.

9 Discharge
  • (1) Section 377 is amended by omitting the heading and substituting the following heading: “Time of discharge”.

    (2) Section 377 is amended by adding the following subsections as subsections (2) to (7):

    • (2) However, a debtor is not automatically discharged if the Assignee—

      • (a) is satisfied that the 12-month period should be extended for the purpose of properly considering whether the debtor's participation in the no asset procedure should be terminated; and

      • (b) sends a written deferral notice to the debtor's last known address before the expiry of the 12-month period.

    • (3) The deferral notice must state an alternative date for automatic discharge, which must be no later than 25 working days after the expiry of the 12-month period.

    • (4) The deferral notice is effective whether or not the debtor receives it.

    • (5) The Assignee must, as soon as practicable, send a written notice of the deferral to each creditor of the debtor known to the Assignee.

    • (6) The debtor is automatically discharged from the no asset procedure on the date stated in the deferral notice.

    • (7) The Assignee may revoke a deferral notice in the same way in which it was sent, in which case, the debtor is automatically discharged from the no asset procedure on—

      • (a) the expiry of the 12-month period in subsection (1), if the notice is revoked before that date; or

      • (b) in other cases, the date of revocation.

10 New section 377A inserted
  • (1) Section 377 is amended by repealing subsection (2).

    (2) The following section is inserted after section 377:

    377A Effect of discharge
    • (1) On discharge under section 377, the debtor's debts that became unenforceable on the debtor's entry to the no asset procedure are cancelled, and the debtor is not liable to pay any part of the debts, including any penalties and interest that may have accrued.

      (2) However, subsection (1) does not apply to—

      • (a) any debt or liability incurred by fraud or fraudulent breach of trust to which the debtor was a party:

      • (b) any debt or liability for which the debtor has obtained forbearance through fraud to which the debtor was a party.

      (3) The debts and liabilities referred to in subsection (2) become again enforceable on discharge under section 377, and the debtor is liable to pay any penalties and interest that may have accrued.

11 New section 377B inserted
  • The following section is inserted after section 377A:

    377B Discharge does not release partners and others
    • A discharge under section 377 does not release any person who, at the date of discharge, was—

      • (a) a business partner of the discharged debtor; or

      • (b) a co-trustee with the discharged debtor; or

      • (c) jointly bound or had made any contract with the discharged debtor; or

      • (d) a guarantor or in the nature of a guarantor of the discharged debtor.

Public registers

12 Purposes of public registers
  • Section 448(3)(a) is amended by inserting and persons discharged from that procedure under section 377 after “persons currently admitted to the no asset procedure”.

13 General information that must be held in public registers
  • (1) Section 449(1) is amended by omitting The public registers must contain the following information in respect of a person (P) who is or has been bankrupt or who is subject to a current summary instalment order or currently admitted to the no asset procedure and substituting The public registers must contain the following information in respect of a person (P) who is or has been bankrupt, or who is subject to a current summary instalment order, or who is currently admitted to the no asset procedure, or who has been discharged from that procedure under section 377.

    (2) Section 449(1)(b) is amended by inserting or has been discharged from the no asset procedure under section 377, after is currently admitted to the no asset procedure,.

    (3) Section 449(1) is amended by inserting the following paragraph after paragraph (h):

    • (ha) if P is discharged from the no asset procedure under section 377, the date when P was so discharged:.

    (4) Section 449(3) is amended by adding , and the bankruptcy that was so annulled does not count for the purposes of section 449A.

    (5) Section 449 is amended by inserting the following subsection after subsection (4):

    • (4A) All information relating to a person who has been admitted to the no asset procedure must be removed from the public register maintained under section 368—

      • (a) 4 years after the date of discharge under section 377; or

      • (b) as soon as practicable after a termination under section 372(a), (c), or (d).

    (6) Section 368(1) is consequentially amended by adding and persons discharged from that procedure under section 377.

14 New section 449A inserted
  • The following section is inserted after section 449:

    449A Information kept indefinitely on public register after multiple insolvency events
    • (1) This section applies in the case of a person who—

      • (a) is or has been bankrupt on 2 or more occasions; or

      • (b) is or has been both bankrupt and discharged from the no asset procedure under section 377.

      (2) Information about the person must not be removed from the public register under this Act and, in particular, section 449(4), (4A), and (5) do not apply to the person.

      (3) The Assignee must ensure that the public register contains all of the information required by this Act about the person and each insolvency event.

      (4) Bankruptcies under the Insolvency Act 1967 count for the purposes of subsections (1) and (3), but bankruptcies under the Bankruptcy Act 1908 do not count for either purpose.

15 Search criteria
  • (1) Section 453(2) is amended by inserting the following paragraph after paragraph (d):

    • (da) is discharged from the no asset procedure under section 377; or.

    (2) Section 453(2) is amended by adding ; or and also by adding the following paragraph:

    • (h) is subject to section 449A (which relates to permanent retention of information on the register after multiple insolvency events).

16 Search purposes
  • (1) Section 454(b) is amended by omitting or is currently admitted to the no asset procedure and substituting is currently admitted to the no asset procedure, or is discharged from that procedure under section 377.

    (2) Section 454 is amended by adding the following paragraph:

    • (e) by any person for the purpose of ascertaining whether section 449A applies to another person.

Part 2
Transitional provisions and amendment to Privacy Act 1993

Insolvent gifts

17 Amendments relating to insolvent gifts apply only to bankruptcies commenced after Act comes into force
  • The principal Act applies to any bankruptcy that is commenced before the day after the date on which this Act receives the Royal assent as if sections 4 to 6 of this Act had not been enacted.

Which debts are cancelled on discharge from no asset procedure

18 Amendments relating to cancellation of fraudulent debts under no asset procedure
  • (1) Any debt that is cancelled under section 377(2) of the principal Act in the period before the enactment of section 377A of the principal Act by section 10 of this Act, but that is later revived by the enactment of section 377A(2), must be treated as if the debt had not been cancelled.

    (2) In particular, the debtor is liable to repay any part of the debt, including any penalties and interest that may have accrued during the period when the debt was cancelled.

    (3) Subsection (2) does not limit subsection (1).

    (4) Any proceedings for enforcement of the debt may be commenced or continued after the enactment of section 377A as if the debt had never been cancelled.

Public registers

19 Amendments relating to 4-year period for public registers apply to all debtors admitted to no asset procedure after Act comes into force
  • The principal Act applies to any debtor who is admitted to the no asset procedure before the day after the date on which this Act receives the Royal assent as if sections 12, 13, 15, and 16 of this Act had not been enacted.

20 Amendments relating to retention of records if multiple insolvency events
  • (1) Section 449A of the principal Act (as enacted by section 14 of this Act) applies to any person regardless of whether any of the insolvency events referred to in section 449A(1) occurred before or after the enactment of that section.

    (2) As soon as practicable after this section comes into force, the Assignee must ensure that the public register contains all of the information required by the principal Act (as amended by this Act) about any person to whom section 449A applies.

    (3) To avoid doubt, the requirement in subsection (2) includes a requirement to ensure that the public register contains information about bankruptcies under the Insolvency Act 1967 in respect of any person to whom section 449A applies.

Amendment to Privacy Act 1993

21 Schedule 2 of Privacy Act 1993 amended
  • (1) This section amends the Privacy Act 1993.

    (2) The item relating to the Insolvency Act 2006 in Part 1 of Schedule 2 is amended by inserting 354, after 62,.


Legislative history

9 March 2009Introduction (Bill 19–1)
24 March 2009First reading and referral to Commerce Committee
28 May 2009Reported from Commerce Committee (Bill 19–2)
21 July 2009Second reading
22 July 2009Committee of the whole House
29 October 2009Third reading
16 November 2009Royal assent

This Act is administered by the Ministry of Economic Development.