If a person who owes you money (a debtor) is adjudicated bankrupt under the INSOLVENCY ACT 1967 (see How to undergo bankruptcy ), you will need to work in conjunction with the Official Assignee to attempt to recover the money owed. It is the Official Assignee's role to sell the assets of the bankrupt estate and distribute the proceeds to the bankrupt's creditors.
If the bankrupt identifies you as a creditor, you will be notified of the bankruptcy and be sent a report outlining the bankrupt's financial position. (Bankruptcies are also advertised in local newspapers and in the New Zealand Gazette.) If payments are likely to be paid to creditors, a Proof of Debt form will be included with the report for you to complete.
It is in your best interests to complete the form correctly and include documents supporting your claim as soon as possible to avoid any later delays. This is because once the debtor is adjudicated as bankrupt the standard procedures available for recovering debt are prohibited (see How to recover a debt from a company and How to recover a debt from an individual).
If you do not receive the Proof of Debt form you should make the appropriate enquiries with the Insolvency and Trustee Service, which is part of the new Ministry of Economic Development.
The Insolvency and Trustee Service will also advise you as to what you may claim for. You may be unable to recover:
You as a creditor have certain rights that you are able to enforce, especially if you are concerned about your position. These are:
Once the bankrupt's estate has been sold, there is an order of priority that the Official Assignee must follow when distributing the funds:
All the money available for unsecured creditors (if any) is distributed proportionately and the debt is then discharged.
As a creditor you have the right to appeal to the High Court against a decision made by the Official Assignee.
The Ministry of Economic Development has established a National Insolvency Database that each office of the Insolvency and Trustees Service has access to. Through this you can search for:
You can also access and search this database through the Ministry's website at www.med.govt.nz (Business and Registries Branch).
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