14 May 2020
RITANZ has tirelessly advocated for the protection of creditors and licensing of insolvency practitioners over the years and were delighted when the government enacted the Insolvency Practitioners Reg... RITANZ has tirelessly advocated for the protection of creditors and licensing of insolvency practitioners over the years and were delighted when the government enacted the Insolvency Practitioners Regulation Act and the Insolvency Practitioners Regulation (Amendments) Act which was set to come into force and effect on 17 June 2020. As a result of the COVID-19 lockdown the government rushed to introduce relief measures to keep businesses afloat and money flowing through the economy. RITANZ worked closely with MBIE and other stakeholders to drive the insolvency measures and provide tangible mechanisms and amendments to legislation to give directors of companies a toolkit to work with during these unprecedented times. On 5 May 2020 the COVID-19 Response (Further Management Measures) Legislation Bill was introduced and had its First Reading in Parliament 8 May 2020. The Bill includes the proposed Safe Harbour and the Business Debt Hibernation amendments to the Companies Act 1993 which make up the backbone of this tool kit. RITANZ prepared a written and oral submission for the Select Committee supporting the Safe Harbour provisions and Business Debt Hibernation regime but asking that any delay to implementing Insolvency Practitioner regulation be as short as possible, if needed at all. RITANZ went on to say that in the current economic circumstances, strong insolvency practitioner regulation is critical. RITANZ understands that the target commencement date remains June 2020, and that the backstop has been extended because of unpredictability caused by COVID-19 however RITANZ urges the Government not to delay the commencement of the insolvency practitioner regulation regime any longer than absolutely necessary. MBIE has today put out a note as follows: "The Insolvency Practitioners Regulation Act 2019 and the Insolvency Practitioners Regulation (Amendments) Act 2019 are scheduled to come into force on 17 June 2020. However, to allow for delays caused by circumstances related to COVID-19, legislation has been introduced which would defer commencement of insolvency practitioner licensing until 1 June 2021, with the potential for it to be brought into force earlier. The insolvency practitioners regulation regime remains a priority for MBIE, and the intention is that the regime will be brought into force before the end of 2020, subject to government approvals and processes. The regime is expected to bring trust and confidence in the insolvency practitioners’ profession at a time when the numbers of insolvencies is expected to rise. MBIE expects to provide its next update on the commencement of the scheme in July 2020. Please keep monitoring the Insolvency Practitioners Register website for news of any change to the commencement date." Whilst we are disappointed at any delay to this critical licensing legislation, we will continue to work with both MBIE and Chartered Accountants Australia and New Zealand to ensure that we are doing everything possible to shorten the delay and bring the licensing into effect as soon as is possible. Read the full Bill here