As of today, the anticipated licensing regime for insolvency practitioners is in force. The commencement of the licensing regime and remaining provisions of the Insolvency Practitioners Regulations Act 2019 (IPRA) was postponed earlier this year due to COVID-19.

You can read about what has already come into force under the IPRA in our article here.

Accredited and recognised bodies

The Registrar of Companies has approved the New Zealand Institute of Chartered Accountants (NZICA) as an accredited body under the IPRA. NZICA is the statutory body responsible for regulating New Zealand resident members of Chartered Accountants Australia and New Zealand (CA ANZ).

The Restructuring Insolvency & Turnaround Association New Zealand (RITANZ) has also been approved as a recognised body pursuant to s 57(2) of the IPRA. Insolvency practitioners who have RITANZ membership are eligible to apply for a licence from NZICA.

So, what now for insolvency practitioners?

We have developed a simple timeline, which sets out the steps and key dates of the transitional period of the licencing regime. To download a copy of the timeline, please click here.

Insolvency practitioners who are members of an accredited or recognised body

Insolvency practitioners who are currently members of an accredited or recognised body now hold a transitional licence and must apply to an accredited body for a licence by 31 December 2020. Insolvency practitioners who apply for a licence within the next four months will continue to have a temporary licence until their application is considered by an accredited body.

Accredited bodies have until 31 August 2021 to determine these licence applications. An insolvency practitioner will become a fully licenced practitioner under the IPRA if their licence is approved. If the application is declined, the practitioner will not be licensed to take insolvency appointments.

Unlicensed practitioners

A person who is not a member of an accredited or recognised body must now comply with section 57 of the IPRA in order to be able to apply to be a licensed insolvency practitioner and take on new insolvency engagements. Members of religious societies whose beliefs preclude membership of other organisations can seek an exemption. Section 57 also provides an exemption for overseas practitioners.

Unlicensed insolvency practitioners can no longer accept new insolvency assignments and have until 31 August 2021 to complete any existing insolvency assignments. If any assignments are not complete by this date, they must retire from those assignments and appoint a successor who is a licensed practitioner.

A qualified accountant or lawyer who does not have a licence can still accept appointment as a liquidator of solvent companies. However, if it transpires that the liquidation is an insolvent liquidation, the liquidator must resign and appoint a successor who is a licensed insolvency practitioner.

A person who accepts an appointment as an insolvency practitioner without a licence will commit an offence punishable by a fine of up to NZ$75,000.

If you have any questions in relation to the implementation of this regime, or the licencing of insolvency practitioners generally, our team would be happy to assist you.