​The Ministry of Business, Innovation and Employment (MBIE) is proposing law change after the Court of Appeal ruled that KiwiSaver funds are beyond the reach of the Official Assignee.

The effect of the ruling is to provide a higher level of protection for KiwiSaver balances than for other forms of retirement savings.

MBIE is seeking feedback on a range of options to create a uniform policy approach to the use of retirement savings in bankruptcy.

Submissions close on 30 September 2016. We encourage you to make a submission.

Background

The Court of Appeal has dismissed an appeal by Steel & Tube Holdings Limited (STH) against the legal basis and quantum of a $750,000 judgment based on a “de facto amalgamation” with its subsidiary company.

The ruling reinforces the message from the High Court that directors must be careful to maintain a subsidiary’s independence if they are to protect the parent against liability for the subsidiary’s debts.

The context

​Directors do not need to consider creditors’ interests when determining the fairness of their own remuneration, even after the company has become insolvent, the Court of Appeal has found.

The facts

The Companies Act 1993 requires that directors who vote to authorise director remuneration must sign a certificate stating that, in their opinion, the payment is fair to the company and setting out the grounds for that opinion.

The Ministry of Business, Innovation and Employment (MBIE) is seeking submissions by 7 October on recommendations from the Insolvency Working Group.

We canvass the issues. Michael Arthur of Chapman Tripp is a member of the Working Group.