Just what is an account receivable has been the subject of much debate, because it determines what assets are used to satisfy preferential claims, i.e. who gets paid first in a receivership or liquidation. In 2008, the High Court judgment in Commissioner of Inland Revenue v Northshore Taverns (in liq) confined “accounts receivable” to “book debts”. Although since criticised, that judgment was the only judicial authority on the point.
The Court of Appeal has affirmed the High Court’s ruling that a voluntary administrator may only use a casting vote where the number of creditors voting for and against the resolution is equal.
The second limb of the test, that the 50% represent at least 75% in value, cannot be the subject of the casting vote. Nor can the casting vote be used to choose between the number and the value.
Resource consents and environmental risks can affect the value of an insolvent company's assets, and can give rise to civil or criminal liability.
This Brief Counsel examines:
- when resource consents require transfer to a new owner, and
- potential liabilities that insolvency practitioners may face.
Types of consents
Five types of consent are available under the Resource Management Act 1991 (RMA):
A lien is the right to hold on to goods, and in some cases sell them, in order to ensure payment. Often the debt will be connected with services related to the goods.
A lien can be obtained by contract, or in certain specific situations the law creates it automatically. The difference can be significant.
Under the Personal Property Securities Act (PPSA), the holder of a common law or statutory lien may in some cases have special priority over a company’s secured creditors.
Types of lien
Findings last week of criminal liability in the Nathans Finance case echo the Centro ruling from the Australian Federal Court last month and make it clear that directors must apply their own judgement in the exercise of their duties rather than simply relying on management and expert advice.
A recent judgment in the Wellington High Court makes receivers, liquidators – and, potentially, the directors of companies in receivership and liquidation – personally liable for GST on the sale of mortgaged properties even where the mortgagee is not GST registered.1
The decision is being appealed and may be overturned as – in our view – it rests upon an unusual interpretation of the law.
Registration will be mandatory under the Insolvency Practitioners Bill as reported back to the House by the Commerce Committee. This is a radical and far-reaching change from the negative licensing regime initially proposed in the Bill.
This Brief Counsel summarises and comments on the Committee’s report.
Big receiverships often test legal boundaries, and the Crafar group receivership is no exception. Gibson & Stiassny v StockCo & Ors1 is the longest decision to date on the Personal Property Securities Act 1999 (PPSA).
Although the facts are complex, the practical take-outs are fairly simple:
The Gibson & Stiassny v StockCo & Ors litigation in relation to the Crafar receivership has clarified important aspects of the Personal Property Securities Act 1999 (PPSA).
The procedures seem obvious in the abstract but, as the case demonstrates, can be less obvious on the ground: