Licensed insolvency practitioner obligations

On this page:

• Provide accurate details and keep them up to date
• Prepare and file reports
• Report serious problems
• Other obligations

Provide accurate details and keep them up to date

Insolvency practitioners must provide the correct details to the accredited body for licensing and registration, as well as ensuring any changes are communicated accordingly.

They must also meet the professional and ethical obligations set by their accredited bodies.

Prepare and file reports

Insolvency practitioners must prepare and file reports with the Registrar of Companies at various stages of the liquidation, receivership or voluntary administration.

Find out about voluntary administration, receivership and liquidation (external administration), and the roles and responsibilities of those appointed to manage company affairs on the Companies Register website.

Filing appointments and reports with the Registrar of Companies

The regime requires all insolvency practitioners to hold an insolvency practitioners licence.

Subject to transitional provisions, insolvency practitioners will now require a licence to file appointments and reports on the Companies Register. A representative of an organisation that has a licensed insolvency practitioner will be able to file reports on their behalf.

Changes to reporting requirements

The package of legislative reforms that led to the Insolvency Practitioners Regulation Act 2019 (the Act) also updates the reporting requirements for liquidations, receiverships and voluntary administrations.

The new reporting requirements specify in greater detail the content of insolvency reports.

For example, liquidator’s initial reports under earlier legislation were required to contain:

• A statement of the body corporate’s affairs
• Proposals for conducting the liquidation
• The estimated date of completion of the liquidation (if practicable).

Under the updated reporting requirements, liquidator’s initial reports will be required to contain matters including:

• The body corporate’s details such as name and relevant registration numbers;
• The liquidator’s contact details (including the liquidator’s insolvency practitioner registration number)
• The date and time the body corporate entered liquidation
• A brief background as to why the body corporate entered liquidation
• A summary of the liquidator’s proposed actions
• The estimated date of completion of the liquidation (if practicable)
• Depending on whether the liquidation is solvent or insolvent, a statement of the company’s affairs including creditors, assets, liabilities, and pending legal proceedings.

Summary reports

The new reporting requirements also introduce new requirements for summary insolvency reports. Summary reports will be filed after the final reports are filed and apply to liquidations, receiverships and voluntary administrations. The intention for summary reports is to collect more structured data about insolvencies to support the Registrar’s role in overseeing and monitoring insolvency practice in New Zealand, and to inform the development of future insolvency policies.

Summary report information will include:

• The body corporate’s details such as name and relevant registration numbers
• The body corporate’s business industry classification
• Where the body corporate operates (domestic region, national or internationally)
• The insolvency practitioner’s details (including insolvency practitioner registration number)
• Creditor information, including payments to creditors by class and amounts outstanding.

To support the collection of this data, the Companies Office has introduced new online forms for insolvency practitioners to provide the summary report information. These will be available on the Companies Register insolvency online module.

The new reporting requirements apply to insolvency appointments filed after the commencement date of the regime.

Report serious problems

The Act introduces a new requirement for insolvency practitioners to report serious problems they identify in the course of insolvency engagements.

What is a serious problem?

The definition of a ‘serious problem’ is set out in section 60(2) of the Insolvency Practitioners Regulation Act 2019 .

All licensed insolvency practitioners should review this section to ensure that they are familiar with its requirements. If you are uncertain about any of its provisions, or whether it applies to a particular set of circumstances, you should seek specialist advice. The following is a summary only, and is not an authoritative interpretation of the provisions of the section.

In summary, ‘serious problems’ include the following matters: any criminal offence committed by the body corporate

• any criminal offence committed by a director, officer, or shareholder of the body corporate
• any misapplication of the body corporate’s money or property by a person who has taken part in the formation, administration, management, liquidation or receivership of the body corporate
• any negligence, default, or breach of duty or trust by a person who has taken part in the formation, administration, management, liquidation or receivership of the body corporate
• any material breach of a director’s duty by a past or present director of the body corporate
• the body corporate has been managed in a way that has materially contributed to the body corporate:
• being put in to liquidation because of its inability to pay its debts
• ceasing to carry on business because of its inability to pay its debts
• execution is returned unsatisfied in whole or in part
• being put into receivership
• entering into a compromise or arrangement with its creditors
• being put into voluntary administration.

In each case, the problem must relate to a body corporate in receivership, administration or insolvent liquidation.

Who to report to

All serious problems must be reported to the Registrar of Companies.

In addition, if the serious problem concerns the possible commission of an offence, reports must be sent to one or both of:

• the New Zealand Police
• the relevant body responsible for investigating or prosecuting the offence –for example, a criminal offence involving financial markets legislation should be reported to the Financial Markets Authority (FMA).

In addition, if the insolvent body corporate is a licensed insurer, the report must be sent to the Reserve Bank of New Zealand.

The report must identify the bodies to whom it has been sent.

When to report

Licensed insolvency practitioners must report serious problems as soon as practicable.

How to report

If you have detected a serious problem, please notify the Registrar of Companies using our online form.
Report a serious problem

The legislation

For further information, see sections 60 to 64 of the Insolvency Practitioners Regulation Act 2019 .

Other obligations

The Act also:

• restricts non-arm’s length transactions between licensed insolvency practitioners and insolvent body corporates (see section 66 of the Act )
• restricts related party transactions between licensed insolvency practitioners and insolvent body corporates (see section 67 of the Act ).

Last updated 1 September 2020