Businesses that go into receivership, administration or liquidation but continue to trade will be required to honour up to 50 per cent of the value of gift cards or vouchers, in new law to be proposed by the Government.
Commerce and Consumer Affairs Minister Kris Faafoi said many consumers are left out of pocket when a business is insolvent.
It spurred the Government to announced a raft of proposed changes that also include protecting employment entitlements and slashing the 'claw back' period.
Mr Faafoi said the Government was also intending to extend the "scope of the entitlements for employees of failed companies, so that both payments in lieu of notice and long service leave will be protected in the same way as wages".
He said the 'claw back' period that allows liquidators to reverse transactions made by a company up to two years before they are put into liquidation would be reduced to six months.
Kathmandu and Noel Leeming gift cards can now be used anytime the recipient chooses, will other retailers follow suit? (Source: Other)
"However, I've also concluded that two years is not long enough for creditors who have a close connection with a director of the failed company.
"So we'll be increasing the claw-back period from two years to four years for ‘related party’ creditors."
The changes will be proposed in an upcoming Insolvency Law Reform Bill.
SHARE ME