Report No. 2 – Voidable transactions, Ponzi schemes and other corporate insolvency matters

Submissions closed: 23 June 2017, 5pm


On 15 May 2017, the Minister of Commerce and Consumer Affairs announced the release of the Insolvency Working Group’s Report No. 2. Report No. 2 covers the topics of voidable transactions, Ponzi schemes and other corporate insolvency matters.

We are seeking submissions on the recommendations made by the Working Group in Report No. 2. We are also seeking further feedback on an outstanding recommendation from Report No. 1, on whether to introduce a director identification number

Report No. 2 – key recommendations.

Voidable transactions

  • Restore a creditor’s defence to one that only operates where a creditor, in good faith and without suspicion of insolvency, relies on the payment itself (recommendation 1)
  • Reduce the period of vulnerability for insolvent transactions from two years to six months where the debtor company and preferred creditor are unrelated parties (recommendation 2)
  • Reduce the deadline for liquidators to file claims from six to three years (recommendation 7)
  • Simplify the continuing business relation rule by removing the subjective element relating to the parties’ intentions (recommendation 10)
  • Provide that recoveries from reckless trading claims are not available to secured creditors (recommendation 18).

Other corporate insolvency matters

  • Clarify whether long service leave forms part of the preferential claim for employees (recommendation 24)
  • Establish a new preferential claim for gift cards and vouchers (recommendation 25)
  • Place a six month limit on the preferential claims unpaid to Inland Revenue and Customs (recommendation 26)

Ponzi schemes

After the Supreme Court releases its decision in McIntosh v Fisk, consider whether there is a need to amend the Property Law Act by adding a Ponzi presumption and/or a good faith defence (recommendation 16(a))

Director identification numbers

We are also seeking your views on the desirability of introducing a unique identifier for company directors – a director identification number. We are particularly interested in your views on what issues a director identification number would address and the benefits and costs of a director identification number. While the Government has not made a decision on whether to introduce an identification number, we also take this opportunity to seek you views on how a director identification number could work.