Small Business Loses From Insolvency Laws Change
Small Business Loses From Change To Insolvency Laws
Changes to insolvency laws will disadvantage contractors and small business, says Business New Zealand.
Executive Director Anne Knowles says small businesses and contractors, often tradesmen, will now be put so far behind employees in the queue for payment that there will be nothing left for them.
"Priority in the queue is normally determined by statutory obligation - but now employees are being given additional priority despite the fact that there is no statutory obligation to pay redundancy," Ms Knowles said.
"Businesses that have provided goods or services in good faith to a company they may not even be aware is ailing, will be penalised by this move.
"Further disadvantage derives from the fact that Inland Revenue remains a priority creditor - Government is holding to itself the ability to claim priority ahead of all others with just as good if not better claims. In fact Inland Revenue already has a privileged status because it is likely to be in an early position to know the true financial state of a business before any other creditors, and has the power to take funds from business accounts.
"The good intention of protecting employees' position therefore turns out in practice to be a penalty for small businesses - an unfortunate move since growth in jobs depends largely on the health of the small business sector."