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The content of this article may be out of date - please refer to our more recent articles for up-to-date information.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The content of this article may be out of date - please refer to our more recent articles for up-to-date information.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The content of this article may be out of date - please refer to our more recent articles for up-to-date information.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The content of this article may be out of date - please refer to our more recent articles for up-to-date information.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…
The content of this article may be out of date - please refer to our more recent articles for up-to-date information. McDonald Vague strongly recommends that businesses register their security interests on the Personal Property Securities Register ("PPSR"), and increase their awareness of the consequences of non-registration.  Failure to utilise the PPSR can be a doubly expensive process in the event that their debtor company becomes insolvent. Many companies are not aware that the legislation applies to suppliers of goods on retention of title terms, leases of more than one year (or indefinite terms), and consignment goods. Jonathan Barrett, an Associate with McDonald Vague, says valid terms and conditions of trade, as well as registration of a Financing Statement on…
There have been a number of articles in the media lately that have called into question the integrity and honesty of some insolvency practitioners ("IPs"). In one widely reported example, an IP took $80,900 belonging to a liquidated company and deposited it into his own bank account, which he subsequently used for personal and business expenses. Then there are those IPs who have prior convictions for serious fraud or have been disqualified from professional bodies such as the NZ Institute of Chartered Accountants ("NZICA"). For some time now, many stakeholders have been calling for increased regulation of the insolvency profession to ensure that the interests of creditors are given the highest priority. Misconduct by a small number of IPs only…
McDonald Vague has moved offices. Our new address is: Level 10, 52 Swanson St Central Auckland The new offices are located next to the recently refurbished St Patrick's Square. There are a number of parking options available - either on street - pay and display, at Wilson Parking on Swanson Street or at the Farmers Carpark on Hobson Street. Please note our phone numbers and postal address have remained the same. We look forward to seeing you there! DISCLAIMER This article is intended to provide general information and should not be construed as advice of any kind. Parties who require clarification on issues raised in this article should take their own advice.
According to the business.govt.nz website, about one in ten small businesses fail in their first year, and 70 percent capsize within the first five years. These are sobering statistics. Most directors that we meet blame the Global Financial Crisis ("GFC") as the number one reason their business failed. Although the GFC was probably one of the causes of the company's downfall it will not have been the main reason. The main reason a company fails is poor management. It is important for directors to be aware of the bumpy road ahead when starting up their company. Many people are very good at what they do technically, however, they lack the knowledge and know how of running a company.  In our…
Record numbers of New Zealanders continue to leave permanently for Australia, almost 54,000 in 2012 alone. While most of those departing leave in search of higher incomes and warmer weather, some leave to escape their financial responsibilities, whether this is child support, a student loan or a liability under a personal guarantee. Correspondingly, often there are no assets left in New Zealand for the creditor to recover. So, is it really as simple as purchasing a plane ticket to Australia to walk away from debts? This common tactic has become such a concern for the Inland Revenue Department, who administers the student loan scheme, that new sanctions allowing the arrest of overseas based defaulters at the border were announced in…
The content of this article may be out of date - please refer to our more recent articles for up-to-date information. I empathise with creditors who are concerned about cowboys operating and competing in the insolvency field of expertise. These individuals want to make a fast buck and can give the whole profession a bad name. It is time to crack down on the cowboys! Allowing inexperienced and unskilled or less than reputable insolvency practitioners to operate is not in the interest of the economy as a whole. The current practice leads to unsatisfied and uninformed creditors, lack of confidence in the system and uncertainty. Creditors are ultimately bearing the costs of the inexperienced cowboy who is failing to meet…
The content of this article may be out of date - please refer to our more recent articles for up-to-date information. The Companies Amendment Act 2006 implemented on 1 November 2007 increases the transparency and accountability of Insolvency Practitioners and means significant changes to the administration of Insolvencies. The key changes are as follows: •Liquidation by Shareholder appointment allowed within a 10 day time frame from the date of service of a winding up application. •Phoenix Companies - where a new company is formed using the name, similar name or trading name of a failed company, directors can be made personally liable for the debts of the failed company. •More disclosure required of liquidators. •Further Grounds of Liquidator Disqualification -…
The content of this article may be out of date - please refer to our more recent articles for up-to-date information. The Sons of Gwalia decision which was handed down by the High court of Australia in January of this year, clarified three earlier decisions which were made in the years 2005 and 2006. The Sons of Gwalia case and the earlier decisions set out the circumstances where in Australia a shareholder or shareholders can make a claim against a company which will rank equally with the claims of the unsecured creditors. The earlier cases formulated the following principles:- a. Clarification that shareholders who have bought shares under a prospectus that contained misleading or deceptive statements or omissions can claim…
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