When a debtor has multiple creditors, often it seems as if there is no alternative but to throw in the towel and file for bankruptcy. Bankruptcy does have some advantages in that an individual is released from all his or her existing debts and that in three years (as long as no objection is filed in the Court) is discharged from bankruptcy. There are however downsides to bankruptcy.

On May 24, 2019, New Zealand-based online asset exchange, Cryptopia Limited, filed a petition under Chapter 15 of the United States Bankruptcy Code seeking recognition of its New Zealand liquidation proceeding in the United States. On the same day, the United States Bankruptcy Court for the Southern District of New York granted provisional relief to Cryptopia, including extending the benefits of the automatic stay to prevent creditors or other parties in interest from taking actions to interfere with Cryptopia’s assets.

In Robt. Jones Holdings Limited v McCullagh [2019] NZSC 86, the Supreme Court unanimously held that it is unnecessary for a liquidator to prove that any payment actually diminished the assets of a company to claw back that payment under s 292 of the Companies Act (Act). 

Non-party costs are exceptional and are only awarded when it is just to do so and when 'something more' about the non-party's conduct warrants costs.  The involvement of a parent company in litigation and avoiding a realistic settlement is an example of the 'something more' requirement being met.  In Minister of Education v H Construction North Island Ltd (in req and liq) [2019] NZHC 1459, the High Court found that McConnell Ltd's (McConnell) actions in this litigation warranted awarding non-party costs and disbursements of over a million dollars.

In Robt. Jones Holdings Limited v McCullagh [2019] NZSC 86 the Supreme Court confirmed that the requirements outlined in s 294 Companies Act 1993 (“Act“”) are all that is required in order to void an insolvent transaction. In particular, the Supreme Court confirmed there is no additional common law principle that the transaction must have diminished the net pool of assets available to creditors.

Background

FTG Securities Limited involved an application by FTG Securities Limited (FTG) for declarations as to the interpretation of a Deed of Priority.  The Deed of Priority was entered into by Canterbury Finance Limited (CFL) and a bank with respect to the security interests in Tuam Ventures Limited (in Rec and in Liq) (TVL).  Declaratory relief was sought against the bank and the receivers of TVL.  An issue raised by way of an affirmative defence was whether the assignment of TVL's debt and securities to FTG is valid from a technical legal perspective and therefore wh

In what is likely to be the final chapter in the Ross Asset Management (RAM) liquidation, assuming no appeal is filed, the High Court has considered an application for directions by the liquidators of Ross Asset Management concerning how best to distribute recovered funds.  David Ross operated RAM as a Ponzi scheme for decades until the fraud was uncovered in 2012 and the company went into liquidation.  Mr Ross is currently serving a ten year plus term of imprisonment for his role as architect of the scheme.

In Lafferty v Official Assignee Gordon J considered Mr Lafferty's appeal of two decisions of the Official Assignee to refuse Mr Lafferty's applications under section 62(1)(a) of the Insolvency Act 1967 to enter or carry on business while bankrupt.

Gordon J dismissed the appeal on the basis that Mr Lafferty could not show that the Official Assignee had made an error of law, failed to take into account relevant considerations or was manifestly wrong in exercising its discretion under regulation 34 of the Insolvency Regulations 1970.

The liquidators of Wenztro Co-operation Limited (Wenztro) appealed against the High Court's decision not to order Wenztro's former director, Mr Ellis, to produce and be examined on personal financial information including tax return and bank statements. The liquidators sought to assess Mr Ellis' judgment worthiness for the legal proceedings they had commenced against him for breaches of directors' duties.

We previously reported on the Court of Appeal decision in Trends Publishing International Ltd v Advicewise People Ltd & Ors. The case concerned a compromise under Part 14 of the Companies Act 1993 that was set aside by the High Court on the basis that the challenging creditors, who had voted against the compromise, had been unfairly prejudiced by the decision to call only one meeting of creditors.