A recent Court of Appeal decision has prevented the Official Assignee gaining access to the Kiwisaver funds of individuals who have been declared bankrupt.
The decision will no doubt anger many creditors who were hoping to receive some recompense.
It is common practice for any supplier to request a personal guarantee from the directors of a company if they are to supply goods on credit. When the company fails, the creditor then still has the option to pursue the director personally under the guarantee.
Many directors end up in bankruptcy because of the high volume of personal guarantees given in order to keep the business operating. Many of these directors will have also built up Kiwisaver funds which can no longer be accessed by the OA.
The Court determined that the Kiwi Savers Act specifically prevents an assignment or transfer of funds and, interestingly, to allow such an assignment would contradict the purpose of the Act.
So it seems creditors are left out in the cold. But what happens in the case of a director who deliberately makes additional payments into their Kiwisaver knowing they are facing bankruptcy? Well, it seems they may also be protected. Perhaps a legislation change is in order.