General

The October election is fast approaching and campaigning by all parties is underway. As policies and promises continue to be released, economic policies are likely to be front and centre for many voters. Not all parties have released their policies detailing how they plan to guide our economy through the post lockdown period, any tax policy changes they would like to see, and how they plan to pay New Zealand’s lockdown debt. For some, the wage subsidy extension they received will have come to an end in August 2020. For other businesses who did not see a 40% downturn in their income following the end of the first lockdown period, the second lockdown period meant that they have now qualified…
One of the obligations on the liquidators of insolvent companies, whether appointed by the shareholders or the Court, is to review the books, records and affairs of the company to identify any potential causes of action that could lead to a benefit for creditors. This could include identifying potentially voidable transactions, where an individual creditor has received a payment, giving it preference ahead of the body of creditors, or the transfer of assets or property to other parties for no, or insufficient, consideration. It could also include identifying breaches of duties by the directors which has caused creditors of the company to suffer increased losses. While many such causes of action are identified and settled by agreement between the liquidators…
We are expecting August and September to be interesting months with the electioneering that will be taking place, we will see promises from all parties on how they will be spending our taxes if they are elected and hopefully some more details on their plans for how they will guide the economy post covid. The latest unemployment rate figures have been released for the June 2020 quarter showing 4.0%. This is down 0.2% on the first quarter for the year. While the politicians will crow that this is well down on treasurers estimates for the same time frame there was an additional wage subsidy extension introduced which has assisted businesses in keeping people employed with 400,000 employees still utilising the…
On 1 September 2020, the remaining provisions of the amendments to the Companies Act 1993, and Insolvency Practitioners Regulation Act 2019 (IPRA) will come into force. Some changes that creditors, directors, shareholders, and their advisors need to know about are: Restriction on Shareholders or Board Appointing Liquidators The 10-working day window for shareholders to appoint liquidators from service of winding up proceedings is gone. Once a company has been served with Winding Up proceedings brought by a creditor, the company’s shareholder(s) or board will be unable to appoint liquidators unless they have the consent of the creditor who is pursuing the winding up proceeding. For shareholders needing or wishing to appoint liquidators we encourage them to start the process as…
June 2020 saw the New Zealand Government declare the country “virus free” after 17 days of no new COVID-19 cases and a move to Level 1 on 9 June 2020, ahead of schedule. With the exception of border control restrictions, all COVID-19 related restrictions imposed during Lockdown were lifted. The post-Lockdown experience for SMEs has been varied. Some have seen incredible community support and are feeling confident about their futures, notwithstanding the difficult quarter they have just experienced. Others are struggling to adjust to the post-Lockdown economy and many are being confronted with difficult decisions on what their businesses will need to look like, if those businesses are to survive in the medium term. If you want to have a…
In May 2020, non-essential services reopened for trading. New Zealand moved from Level 4 to Level 3 on 27 April 2020 and the drop down to Level 2 happened on 13 May 2020. The “new normal” at Level 1 started on 9 June 2020. Because of the Government assistance that has been provided to businesses, we anticipate that the economic effects of the Lockdown will be seen over a longer period of time than in previous economic slowdowns. Many businesses experienced a surge in trading activity when they reopened at Level 3 and another spike in revenue at the start of Level 2 but few businesses have seen consistent revenue week on week since reopening. The budget announcement was made…
There has been a lot of commentary around what the COVID-19 global pandemic is doing to countries’ economies. Some economists are predicting a global economic downturn to be the worst recession since the Great Depression and most are expecting this downturn to be worse than the GFC. Today, 14 May 2020, New Zealand is moving from Level 3 to Level 2 and a lot of businesses are re-opening for the first time since the Level 4 lockdown came into effect seven weeks ago. In the weeks and months ahead, we will find out what effect the lockdown has had, so now would be a good time to look at the NZ insolvency figures to April 2020 and how those figures…
NOTICE TO CREDITORS – UNCLAIMED MONIES - FOURTH AND FIFTH DISTRIBUTION DML Resources Limited (In Liquidation) was placed into liquidation by order of the High Court at Auckland on 7 May 1998, pursuant to Section 241(2)(c)] of the Companies Act 1993. The liquidation is in the final stages of being completed. The funds received over the period of liquidation funded distributions to unsecured creditors. Most unsecured creditors received 100 cents in the dollar. Of the five distributions, the liquidators have unclaimed monies from the fourth distribution in June 2013 and the fifth distribution in September 2014. The Liquidators invite those creditors/employees who believe that they have a claim to these distributions to make contact with us, on 0800 30 30…
Many businesses are facing hard times in the current market with cashflow stretched and delayed creditor payments. Your business might be one of them. Early action is critical in determining whether your business can be rescued or not. Taking steps to ensure your company remains financially sound will minimise the risk of an insolvent trading action and facing personal liability. It may also improve your company's performance. There are serious penalties and consequences of insolvent trading including civil penalties and criminal charges. Insolvency can be established by either of the Cashflow test or Balance Sheet tests. Note, importantly, that only one of these tests needs to be met to establish insolvency. The Cashflow Test is simply whether your company can…
Whether or not a business decides to transact all or part of its business by way of barter, rather than by cash payment, is a decision for the directors but, in making that decision, directors need to remember the old business adage – “Cash is King”. There can be advantages in using the barter system to settle transactions between your business and your clients, but you will still need to have sufficient cashflow. There are still wages and taxes, including GST on the barter transactions, which you will have to pay using money and there will be other goods and services that you require that you cannot make payment for using barter credits. If you cannot find enough business expenses…
The much-delayed City Rail Link (CRL) is having an enormous impact on businesses affected by its mammoth construction works. A cluster of financially devastated Albert St businesses are struggling for their financial future due to a blow-out in the completion of the CRL construction works. City Rail Link Limited was set up in June 2017 and is a joint venture between the Government and Auckland Council. Initial excavation work on Albert St commenced in July 2017. The CRL is New Zealand’s biggest ever transport-related infrastructure project. It is designed to double Auckland’s rail capacity. It comprises a 3.45-kilometre dual-tunnel underground rail link sunk up to 42 metres beneath the centre of Auckland’s CBD. Businesses Under Stress Debt levels are rising…
In many cases, the director of a company will also be a shareholder – but the roles are separate and have different powers and responsibilities. There can also be different levels of control within those roles. In this article we will look at the differences and discuss how those can be managed to lessen the chances of an impasse on any issue. SHAREHOLDERS: The Shareholders of a company have the rights and obligations set out in Part 7 of the Companies Act 1993 (the Act). For the most part, those powers can be exercised by an ordinary resolution passed by a simple majority of those shareholders entitled to vote and voting on the question. There are, however, certain powers which…
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