Articles

When a company fails one of four things usually happens:- A receiver is appointed An administrator is appointed It enters into a compromise with its creditors It is put into liquidation (this will be covered in Part 2) This article seeks to explain the rights that creditors have in each of the above insolvency proceedings. It is written from the perspective of the ordinary unsecured creditor. 1 - Receivership The purpose of receivership is to repay the debt owed to the General Security Agreement ("GSA") holder.  GSA holders tend to be banks but can also be private lenders (including directors and family members). The receiver's obligations are primarily to the GSA holder who appointed them. If a receiver holds surplus…
Our clients sometimes express frustration and disbelief when directors of insolvent companies form new companies, often trading as normal, especially when these new companies then also fail.  A frequent question is along the lines of "surely this can't be legal?". In this short article we seek to clarify the law in this complex area. It is important to understand that there is no general prohibition on directors starting out again, even with an essentially identical business.  Instead the law seeks simply to ensure that suppliers are not misled or confused as to which entity they are dealing with, and are aware of any insolvency, and also any related sale of assets to a new company.  It is then up to…
The earthquakes in Canterbury created a disaster on a scale not previously seen in New Zealand during our lifetime. Christchurch will be rebuilt and when it gets into full swing it will be the biggest building project in New Zealand history. Treasury has forecast that the cost of the rebuild will be circa NZ$40 billion. Fortunes will be made out of the rebuild, but like any boom, history tells us there will be some spectacular failures along the way. In this article we will explore the issues facing construction companies waiting for the Christchurch rebuild, the chances of another large construction company collapse and some advice on how you as a professional advisor or construction industry contractor can help protect…
A statutory demand is a claim under Section 289 of the Companies Act 1993.  If you or a client receive a statutory demand you are required to pay the specified sum, enter into a compromise or give charge over property to secure payment of the debt to the reasonable satisfaction of the creditor within 15 working days of the date of service, or such longer period as the Court may order. Received a Statutory Demand? We can help If you have been served with a statutory demand you need to speak to us immediately. The earlier you contact us the more options you have. There is a 10 working day window before your options start to close. Contact us now…
Our first article of the year reviews the significant issues and developments in insolvency from 2012 and looks at their impact on the industry into 2013 and beyond. Insolvency practitioner licensing has not yet been adopted  Legislation has been drafted however the approach and extent to a licensing regime seems to be difficult to agree and has generated much discussion within what is a relatively small industry. In late 2012 INSOL (the NZICA administered insolvency special interest group) proposed a voluntary registration regime, in an effort to provide all parties with more confidence when choosing and dealing with insolvency practitioners ("IPs"). IPs regularly hold significant funds for creditors, with minimal oversight.  The recent conviction of a liquidator for theft of…
Seventh Schedule DISCLAIMERThis article is intended to provide general information and should not be construed as legal advice.  Parties who require clarification on issues raised in this article should take their own legal advice.
  The content of this article may be out of date - please refer to our more recent articles for up-to-date information. Text of an address to a colloquium "Chinese Insolvency Law Symposium: Developing an Insolvency Infrastructure" held at the University of Hong Kong, 17-18 November 2000 The colloquium was organised by the Asian Institute of International Financial Law and co-sponsored by the Department of Politics and Law, China University of Politics and Law, Duke University Global Markets Centre, Hong Kong Society of Accountants, Inter-Pacific Bar Association, and Pepperdine University School of Law. The colloquium involved discussions among academics, insolvency practitioners, judges and government officials from mainland China, Hong Kong SAR and overseas, on issues of PRC insolvency law reform…
The content of this article may be out of date - please refer to our more recent articles for up-to-date information. Business Law Reform Bill Submission 6 July 2001 Marian Kljakovic Competition and Enterprise Branch Ministry of Economic Development P O Box 1473 WELLINGTON Dear Ms. Kljakovic BUSINESS LAW REFORM BILL 2001 I am pleased to submit the comments of INSOL New Zealand, on the Business Law Reform Bill 2001. INSOL is the New Zealand Chapter of INSOL International, the professional organisation of insolvency practitioners. While we applaud the Ministry's intention to undertake the necessary housekeeping to smooth legal procedures relating to business, we have reservations concerning some of the proposals: Disclosure of Directors Addresses The discussion paper proposes the…
The content of this article may be out of date - please refer to our more recent articles for up-to-date information. On 8 August 2001 a case was heard before Laurenson J. Although the case was specifically to do with Tasman Pacific Airlines NZ Limited, the outcome of the case affects all liquidators. The decision in the case read as follows: "The applicant liquidators do not have any power, right and/or obligation to provide a list of creditors of Tasman Pacific Airlines of NZ Ltd (In Receivership and In Liquidation) to any person or body except in circumstances prescribed in s.256 of the Companies Act 1993". The important part of the decision insofar as we are concerned is the part…
The content of this article may be out of date - please refer to our more recent articles for up-to-date information. In an important judgment in Re Brumark Investments Limited, the Privy Council upheld the concept of fixed charges on present and future debts but held that Re New Bullas Trading Limited [1994] 1 BCLC 449 had been wrongly decided. In Re New Bullas the debenture was expressed to operate as a fixed charge over uncollected book debts with the fixed charge being released and replaced by a floating charge when the book debt was paid and converted into proceeds. If a charge over debts is to be fixed there must be a real restriction on the borrower's ability to…
The content of this article may be out of date - please refer to our more recent articles for up-to-date information. McDonald Vague, Insolvency and Business Recovery Specialists, strongly recommend that businesses register their security interests on the Government's Personal Property Securities Register (PPSR), and increase their awareness of the consequences of non registration. Failure to utilise this legislation can be a doubly expensive process in the event that their debtor company is placed in liquidation. Many companies are not aware that the legislation applies to supplies of goods on credit, leases for terms of greater than one year (or indefinite terms) and consignment goods. Jonathan Barrett, an Associate with McDonald Vague, says valid terms and conditions of trade, as…
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