SIO Supervisor guidelines

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What you need to know

The information in these guidelines is of a general nature. The guidelines are designed to assist Supervisors by providing general details of the legal framework and the Official Assignee’s expectations of Supervisors. The guidelines are not intended to be a manual on how to supervise a Summary Instalment Order.

In addition to using these guidelines, Supervisors must refer to the Insolvency Act 2006 and the Personal Insolvency Regulations 2007, and are expected to be fully aware of the relevant provisions in them.

Any references to days in this document are working days.

Role of a Summary Instalment Order Supervisor

Anyone wanting to apply to be a Supervisor of a Summary Instalment Order should be competent in the ability to administer a Summary Instalment Order and the ability to be impartial.

Criteria for entering into a Summary Instalment Order

To apply for a Summary Instalment Order, debtors’ unsecured debts (excluding any student loan balance) should not be more than $47,0001. Debtors’ should not be in a position to be able to repay their debts immediately. Proposals should include a statement from the debtor / intended Supervisor of the advantages to creditors if the proposal is accepted. This statement needs to be sufficiently detailed to address all creditors concerns and, therefore, reduce the number of objections that may be received.

1 This amount may be varied biannually by the Governor-General by Order in Council to take account of increases of the Consumer Price Index. Any change will be recorded on our website.

For more information, view section 343 in Insolvency Act 2006.

Before a Summary Instalment Order is made

See Insolvency Act 2006 Sections 341, 342, 353 & 354 and Insolvency (Personal Insolvency) Regulations 2007 Part 5, regulations 44, 45, 46, 53.

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A Summary Instalment Order application can be filed by either a debtor or a creditor (with the debtor’s consent). A Summary Instalment Order application must be accompanied by a correctly completed statement of affairs. Where an application is made electronically, a copy of the application will either be downloaded by the applicant or sent by the Official Assignee’s office to the applicant for his/her signature and the application will not be considered by the Official Assignee until the signed verification statement is received. Debtors wanting assistance in completing their statement of affairs can phone our Business Service Centre on 0508 467 658 to make an appointment for assistance completing their statement of affairs. Debtor’s can also register and log in to our website to complete statements of affairs online. If the statement of affairs is not completed correctly it will be rejected which will slow down the processing period.

Once the Official Assignee has received an acceptable application for a Summary Instalment Order, the application will be assessed by the Official Assignee within 10 working days. Should the application be accepted the nominated Supervisor and debtor will be advised by the Official Assignee. The applicant then has to send notice to all creditors and guarantors listed in the application advising them of the application. Supervisors may send notification on the applicant’s behalf. A copy of the notification to creditors and guarantors must be sent to the Official Assignee and can be emailed to the Official Assignee at sio@insolvency.govt.nz or sent to Private Bag 4714, Christchurch. A summary of the debtor’s statement of affairs and proposal must be attached to the notification to creditors. The notice to creditors and guarantors must include the following information:

  • Details of proposed Supervisor and whether they will be using the Official Assignee’s trust account.
  • Summary Instalment Order proposal
  • Reasons in support
  • Creditors details
  • Asset details
  • Set out objection process and actual date that objections must be received.

A creditor or a debtor can lodge an objection within 10 working days of the date of notice advising them that an application has been made.

Objections should be lodged with the Official Assignee either by post to Official Assignee:

Private Bag 4714
Christchurch

or email

sio@insolvency.govt.nz

Objections received by the Official Assignee will be dealt with within 15 working days of receipt. If additional information is required to enable the Official Assignee to make a decision, the Official Assignee will request additional information be provided within 7 days of request. If additional information requested is not received, the objection may be rejected. Those affected by the Official Assignee’s decision will be notified.

If the Official Assignee rejects an application for a Summary Instalment Order a new application can be made at anytime if the reason for rejection/termination of the previous application no longer exists. Each application is assessed on its’ merits.

If the Official Assignee does not receive any objections to the making of the proposed Summary Instalment Order the order may be made on the next working day after the objection period has finished. If objections have been received but they are rejected by the Official Assignee, the Summary Instalment Order will be made after the objection period has finished and the objections received have been rejected.

Once the Summary Instalment Order has been made

See Insolvency Act 2006 Section 353 and Insolvency (Personal Insolvency) Regulations 2007 Part 5, Regulation 47.

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Once a Summary Instalment Order is made the Official Assignee will notify the debtor and the Supervisor. The Official Assignee will also list the debtor on the public register of persons who are currently subject to a Summary Instalment Order. The Supervisor is responsible for notifying all creditors and this should be done within 15 working days of the date of issue of the order, a notice should also be sent to the Official Assignee.

Supervisors should include in their notice details of how a creditor accesses the Official Assignee’s website to lodge a claim.

Creditors’ claims

See Insolvency Act 2006 Section 356 and Insolvency (Personal Insolvency) Regulations 2007 Part 5, Regulation 48, 49, 50, 52.

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Creditors are required to submit to the Supervisor a creditors claim form within 15 working days of receiving the notification of the Summary Instalment Order from the Supervisor. Creditors will be able to lodge their claim online through our website.

Interest should not accrue after the date of the Summary Instalment Order and cannot be included in a creditor’s claim. Should a Summary Instalment Order be terminated, then the creditor can continue to charge interest from the date of the order.

If a Supervisor is dealing with two individual Summary Instalment Orders where each debtor shares a joint creditor, the joint debt should be admitted for the full amount of the debt in each Summary Instalment Order. For example, Mr and Mrs Smith have a joint debt of $20,000. The debt should be admitted in Mr Smith’s Summary Instalment Order for $20,000 and admitted in Mrs Smith’s Summary Instalment Order for $20,000. The Supervisor should monitor the distribution from each Summary Instalment Order. When the debt has been repaid to the creditor in full, the claim should be withdrawn by the creditor from each Summary Instalment Order. This ensures that the creditor does not receive more funds than they are due.

Supervisors using the Official Assignee’s trust account will have payments of joint debts monitored for them. Joint debts are admitted for the full amount in each Summary Instalment Order because the debtor is jointly and severally liable and the creditor has the right to claim the full amount of the debt from each debtor.

If admitting a joint debt for the full amount in each individual Summary Instalment Order makes the total debts for one or both of the debtors exceed $47,000 the debtor / Supervisor can approach the joint creditor. An agreement may be reached with the joint creditor to submit a claim for 50%2 of the debt in each individual Summary Instalment Order to enable the debtors to make application for Summary Instalment Orders. However, if one of the Summary Instalment Orders failed the joint creditor would not be able to make a claim for the failed share of the debt in the remaining Summary Instalment Order. Therefore, joint creditors may be reluctant to submit claims at less than their full value.

2 or other % as agreed.

Supervisors should try to resolve disputes about claims before a claim is formally rejected. Supervisors should send the Official Assignee a copy of any notices sent to creditors rejecting claims. Supervisors must notify creditors of their right to appeal in their rejection notice. If agreement cannot be reached between the Supervisor and the creditor, the creditor can appeal to the Official Assignee. Any appeal by a creditor of the rejection of their claim (either in whole or in part) by the Supervisor should be made to the Official Assignee within 15 working days of notification of the rejection. The Official Assignee will subsequently notify the debtor and the Supervisor of the appeal against the Supervisor’s decision to reject the claim. The Official Assignee will invite the Supervisor, debtor and the creditor to make representations within 15 working days in relation to the rejection of the claim. The Official Assignee will then make a decision on the matter and notify all parties of the decision of the review. For general rights of appeal, see section 226 of the Insolvency Act 2006.

If a creditor objects to a Supervisor accepting the claim of another creditor, the Supervisor and creditors should try to resolve the dispute. If agreement cannot be reached between the supervisor and the creditor, the creditor can appeal to the Official Assignee. Appeals objecting to the acceptance of a creditors claim will be dealt with by the Official Assignee in the same way as appeals against rejection.

Debts incurred before Summary Instalment Order

Where late claims are received in relation to debts incurred before the Summary Instalment Order was granted, they may only be admitted by the Supervisor as part of the Summary Instalment Order if it is accepted by the Supervisor and if the claiming creditor is not at fault (for example, if the creditor was not listed in the Summary Instalment Order application by the debtor). Any distributions made to creditors already part of the Summary Instalment Order would not be overturned. The Supervisor will need to apply to the Official Assignee to have the Summary Instalment Order varied to include the additional creditor. Once the Summary Instalment Order is varied the additional creditor must receive back payments as funds allow them to bring their dividends to the same level as creditors already in the Summary Instalment Order.

Debts incurred after Summary Instalment Order

Where claims are received that relate to debts that have been incurred after the order was made, those claims may be accepted by the Supervisor and the new creditor(s) can be included in the administration of the order of the debtor. The Supervisor will need to apply to the Official Assignee to have the Summary Instalment Order varied to include the new creditor(s).

Instalments

See Insolvency (Personal Insolvency) Regulations 2007 Part 5, Regulation 62.

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The debtor must make payment of their first instalment to the Official Assignee's Trust account within 10 working days of the Summary Instalment Order being made by the Official Assignee. Subsequent instalments are required to be made on the dates required within the order.

All payments are to be made directly to the Official Assignee's trust account by electronic means. Details of that bank account will be specified in the Summary Instalment Order. Payments can be made by Direct Debit, Direct Credit or deductions from regular remuneration passed on by the employer electronically.

Supervisors will be notified of any instalment default within 5 working days of the instalment due date. The Supervisor is then responsible for investigating the default, recovering the missed payment and dealing with any application to vary/terminate the Summary Instalment Order where appropriate.

If a debtor regularly defaults in paying instalments, the Official Assignee will terminate the Summary Instalment Order whether requested to or not by the Supervisor.

Dealing with assets included in a Summary Instalment Order

The role of a Supervisor may include dealing with assets included in a Summary Instalment Order. A debtor’s assets do not vest in the Supervisor or the Official Assignee. However, the Supervisor has the authority to supervise the debtor’s compliance with the terms of the Summary Instalment Order, including the sale of any assets included in the order. If a debtor has included assets as part of their Summary Instalment Order the Supervisor must oversee the sale of the assets and ensure the security of the asset.

  • Assets included in a Summary Instalment Order must be sold within 1 month of the Summary Instalment Order being made, unless other sale conditions are specified in the order. If assets are not sold within 1 month the Supervisor must notify the Official Assignee.
  • Assets must be insured at the cost of the debtor until they are sold.
  • Proceeds from the sale of assets must be deposited to the Official Assignees' Trust account within 5 working days of their receipt.
  • If the terms in the Summary Instalment Order relating to the sale of assets cannot be met, variation should be sought. Creditors then have the option to make application to the Official Assignee for the Summary Instalment Order to be terminated

Supervisors consenting to supervise a debtor’s Summary Instalment Order which includes the sale of assets, must ensure assets have been valued realistically by the debtor.

Distributions

See Insolvency Act 2006 Section 358 and Insolvency (Personal Insolvency) Regulations 2007 Part 5, Regulation 63.

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The Official Assignee will prepare all distributions and seek Supervisors’ approval before disbursing funds.

Varying Summary Instalment Orders

See Insolvency Act 2006 Section 350 and Insolvency (Personal Insolvency) Regulations 2007 Part 5, Regulations 51, 57, 58.

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An application to vary a Summary Instalment Order can be made by the debtor, any creditor or Supervisor. If a Summary Instalment Order needs to be varied, application should be made to the Official Assignee in writing clearly stating the reasons for and details of what is to be varied. If the variation of the Summary Instalment Order would detrimentally affect the interests of the creditors, e.g. lengthen the term of the order, or reduce the amount creditors will receive, all affected parties should be notified of the application with reasons why the Summary Instalment Order should be varied. Affected parties will have 10 working days from the date of notification to object to the variation. If the Official Assignee consents to the variation the Supervisor must notify creditors.

Fees and remuneration

See Insolvency Act 2006 Section 358 and Insolvency (Personal Insolvency) Regulations 2007 Part 5, Regulation 64.

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There is no upfront fee. However, an application fee of $102.22 (GST inclusive) per order applies. This charge will be deducted as part of the distribution calculations.

A Supervisor may charge a debtor remuneration for carrying out his or her duties at an amount or rate fixed by regulation. The current rate a Supervisor may charge is 7.5% of funds recovered. Supervisors are not able to charge additional fees above this rate.

If a Supervisor does not want to charge remuneration, they must notify the Official Assignee when they consent to administering the Summary Instalment Order.

Supervisors must either take the full 7.5% commission or no commission. It is not acceptable to request to take a lesser commission rate. If a Supervisor wants to charge less than 7.5%, they should advise the Official Assignee to charge 7.5% then repay any additional commission they did not want to charge back into the trust account. Any commission paid back into the trust account would be redistributed at the next distribution date on the final distribution the correct commission rate will be calculated.

Please note: Supervisors must note that their fee can only be taken as a % of funds actually received. The amount of the total estimated fee cannot be taken from the first distribution.

The Official Assignee will charge a debtor remuneration at a current rate of 2.5% of funds recovered. This will be applied towards covering the Official Assignee’s costs in relation to administering summary instalment orders. This charge will be deducted as part of the distribution calculations.

What if a Supervisor cannot carry out the term of Summary Instalment Order?

If a Supervisor is unable to finish the term of a Summary Instalment Order, a replacement Supervisor should be approached to supervise the remaining term of the Summary Instalment Order and the debtor asked to consent to the appointment of the replacement Supervisor. An application should be made to the Official Assignee requesting the original Supervisor’s appointment be terminated and the replacement Supervisor be appointed. The debtor’s consent to the appointment of the replacement Supervisor should be provided with the application. The Official Assignee will notify both Supervisors and the debtor if the application is accepted. The Summary Instalment Order does not need to be varied when a new Supervisor is appointed. However, the newly appointed Supervisor must notify creditors of their appointment.

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What if a Supervisor is unable to deal with a distribution when it’s due?

If a Supervisor is aware they will be unable to deal with a distribution when it’s due, e.g. Supervisor is away on holiday, the Supervisor should notify the Official Assignee.

Supervisors will be advised when distribution calculations provided by the Official Assignee’s office need to be authorised. Supervisors will be able to authorise distribution calculations by accessing the Official Assignee’s website from anywhere that has internet access.

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Debts with the Inland Revenue Department

When a debtor is experiencing serious hardship or financial difficulties they can apply to the Inland Revenue to be considered for relief from payment of a debt. Any application by a debtor to the Inland Revenue should be made before submitting their application to the Official Assignee for a Summary Instalment Order. The debtor should approach their local Inland Revenue Department office for this.

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General right of appeal

See Insolvency Act 2006 Section 226.

A person whose interests, monetary or otherwise have been detrimentally affected by an act or decision made by the Official Assignee may apply to the High Court to reverse or modify the act or decision. Application should be made to the court nearest to where the debtor lives within 15 days of the act or decision.

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How do Supervisors get their details on the Official Assignee’s website?

Supervisors who are currently administering summary instalment orders are given the opportunity to be listed on our website for potential debtors to contact them. If you would like to be included on the list on our website, please select this option when completing your SIO Supervisors application form, or by emailing sio@insolvency.govt.nz. It is not compulsory to have your details on our website.

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