Friday, 15 June 2007
It seems likely that the new consumer bankruptcy laws will come into effect at the end of this year. The limit for such bankruptcies is $40,000, which may be a little light and I suspect has been unchanged from the start of the legislative process. The important change for most of those eligible, is the reduction of the period to one year from the previous three years. Compared to many other countries, New Zealand has a long period even for those who are not in a consumer bankruptcy. It has been described as a more penal approach than other countries, such as France where there is greater emphasis on rehabilitation and administration. However the new legislation will also provide for a voluntary administration regime for companies, quite similar to the Australian law. This may be a much more attractive option than receivership or liquidation. Bankruptcy law has suffered in New Zealand from not being sufficient interest to the members of Parliament. I would have thought that a left of centre government would be concerned with those at the bottom of the financial heap, but this legislation has certainly not been pushed. The best that can be said is that it is finally here.