Last Updated on 1 August 2022

By Brent Norling

Bankruptcy is a way to relieve a person of debts they owe to creditors, and where possible, repay those debts from the bankrupt’s estate. It also acts as a security measure as the Official Assignee is granted powers to oversee and control the financial affairs of the bankrupt.

Once adjudicated bankrupt, there are many duties that the bankrupt must comply with so that these purposes are fulfilled. There are also severe consequences for the bankrupt who breaches these duties.

Duties to provide information

Upon adjudication, the bankrupt must file a statement of affairs with the Official Assignee.

This document should reveal all information regarding the bankrupt’s assets, liabilities, income and expenses. In case of Court ordered adjudication, this must be done within 10 working days after receiving the Official Assignee’s notice that the statement must be filed. If the bankruptcy was commenced on the bankrupt’s own application, then the statement of affairs will already have been filed as a prerequisite.

It is important that the bankrupt completes the statement of affairs as soon as possible, as until this is done, the period of 3 years, on expiry of which bankruptcy usually ends, will not begin.

Further, the bankrupt must, as soon as practicable upon adjudication, deliver to the Official Assignee all accounting records, papers, deeds, instruments and any other documentation relating to the bankrupt’s estate in the bankrupt’s possession or control.

Throughout the whole period of bankruptcy, the bankrupt must notify the Official Assignee of any change in address, employment, name or income.

Lastly, where the Official Assignee believes that the bankrupt does not comply with its duties for provision of information, the bankrupt may be summoned to a formal examination under oath before the Official Assignee or the District Court. In addition, the Official Assignee has powers to summon the bankrupt’s spouse and any other person known or suspected to be associated with the bankrupt or his property.

Duties in relation to property

Upon bankruptcy, all property of the bankrupt vests in the Official Assignee. The exceptions are the necessary tools of trade, furniture and effects, to a maximum value set at the Official Assignee’s discretion, and a motor vehicle of a maximum value of $5,000.

There is a general overarching duty for the bankrupt to assist the Official Assignee with realisation of the bankrupt’s property and the distribution of proceeds amongst the creditors. The specific duties can be summarised as:

  1. On demand by the Official Assignee, the bankrupt must deliver all or any of the bankrupt’s property that is under the bankrupt’s possession or control.
  2. The bankrupt must take all steps in relation to the distribution of proceeds to creditors that is required by the Official Assignee.
  3. If the bankrupt acquires property during the bankruptcy, he/she must as soon as practicable, notify the Official Assignee.
  4. The bankrupt is under a duty to supply the Official Assignee whatever information the Official Assignee required regarding the bankrupt’s expenditure and sources of income after adjudication.


As well as above duties, there are several restrictions applying to adjudicated bankrupts.

One common example is the restriction to leave, or attempt to leave, New Zealand without the Official Assignee’s prior authorisation.

Another example is the restriction to undertake any business or being involved in the management of a business without the Official Assignee’s prior authorisation. The restriction extends to any business carried, owned, managed or controlled by a relative of the bankrupt. Further, the bankrupt must not be employed by a relative of the bankrupt or by any company, trust, trustee, or incorporated society that is managed, or controlled by a relative of the bankrupt. Similarly, a bankrupt must not act as a director of a company.

The other important restriction is that the bankrupt cannot obtain credits of more than $1,000 without informing the creditor about the bankruptcy.


If the bankrupt fails, without reasonable excuse, to comply with their duties, or breaches the restrictions, the bankrupt will commit an offence under the Insolvency Act 2006. The penalty for committing such offences can be a conviction for imprisonment or a fine, or both.

Further, the Official Assignee can seek to extend the three-year bankruptcy period.


Bankrupts should be informed of their duties and restrictions imposed on their actions to avoid penalties and the bankruptcy period being extended.

It is also important to consider these duties and restrictions prior to considering whether to enter bankruptcy. While entering bankruptcy might seem as a quick fix to be relieved of debts, the consequences might have long reaching effect.


#bankruptcy #voluntarybankrupty

Brent is the Director of Norling Law. He has a wealth of experience in the District Court, High Court, Court of Appeal and Supreme Court. Brent is passionate about negotiating favourable outcomes for his clients and able to implement this in his daily negotiations.