Insolvency bill for all defaults

Press, 12 February 1986, Page 41

Insolvency bill for all defaults

By

SIMON LOUISSON

in Wellington

The Government is exploring the possibility of drafting an independent insolvency bill to incorporate all individual and corporate insolvency under one law. At present, individuals are dealt with under the Insolvency Act while corporate insolvency is administered in terms of the Companies Act. Speaking to insolvency specialists of the Society of Accountants, the Minister of Justice, Mr Geoffrey Palmer, said present legislation is inappropriate and reflects the “social and legal preoccupation of a bygone era.” The legislation does not facilitate administration of insolvencies. New legislation would seek a thorough analysis of alternatives to bankruptcy and liquidation. Mr Palmer says that all the legislation must reflect commercial transactions, which at present it does not. The insolvency bill will be separate from a revision of the Companies

Act and full consultation with all interest groups will be undertaken. Commenting on the Companies Act, Mr Palmer says the Act is only relevant to public companies which make up only a small percentage of companies. A revision of the Companies Act should address these questions: ® Is it reflective of the corporate law requirements of the commercial community? © Does it encourage the establishment and operation of corporate activities? • Does it provide adequate protection for creditors and impose standards of commercial probity? The present law imposes two-tier administration by directors and members, with separate meetings and powers, which is not appropriate for such entities.

Mr Palmer says that it is because of the time scale for legislative change that he is exploring the possibilities of separate legislation for insolvency.