A long-awaited overhaul of New Zealand insolvency law, the Insolvency Law Reform Bill, is a long-awaited and welcome development. Although the devil lies in the detail of the reform's application, international investors can take encouragement from the reforms, particularly the mechanism available through voluntary administration to rehabilitate distressed businesses, the greater certainty over international insolvencies by adoption of the Uncitral Model Law, and the trans-Tasman approach to business failure.

Subject to the competing demands of other matters on Parliament's legislative agenda, the Insolvency Law Reform Bill is expected to pass into law in 2007.

Current position

Corporate insolvency law in New Zealand is comprised of three primary regimes: liquidation; compromises with creditors; and receivership. The first two of these are governed by parts 16 and 14 respectively of the Companies Act 1993. Receiverships are governed by the Receiverships Act 1993.

Other regimes also exist which are relevant to the insolvent...