The High Court has released its judgment in Re Halifax NZ Limited (In liq) [2021] NZHC 113, involving a unique contemporaneous sitting of the High Court of New Zealand and Federal Court of Australia.

After a somewhat leisurely start, case law regarding the new restructuring plan in Part 26A of the Companies Act 2006 now seems to be picking up pace.

On 13 January 2020, the High Court sanctioned the restructuring plans proposed by three UK companies in the DeepOcean group, under Part 26A of the Companies Act 2006.

The real lesson from Debut Homes – don't stiff the tax (wo)man

The Supreme Court has overturned the 2019 Court of Appeal decision Cooper v Debut Homes Limited (in liquidation) [2019] NZCA 39 and restored the orders made by the earlier High Court decision, reminding directors that the broad duties under the Companies Act require consideration of the interests of all creditors, and not just a select group. This is the first time New Zealand’s highest court has considered sections 131, 135 and 136 of the Companies Act, making this a significant decision.

After a year in which numerous businesses have relied on various forms of government support to stay afloat, many will be hoping that 2021 offers the chance to emerge from this period and resume some degree of normal trading. Certainly, the coming year will be make-or-break time for those businesses that have been most impacted by the pandemic – and as government assistance is wound back, the demand for working capital funding is likely to be high.

With over a third of hospitality businesses currently at moderate to severe risk of insolvency (according to the most recent ONS survey), many in the sector are urgently considering the best way forward. One strategy, which we have recently seen a number of casual dining businesses like Carluccios and Gourmet Burger Kitchen deploy, is a ‘prepack’ administration. However, although the deals involving household names may grab the headlines, pre-packs are also widely used by small and micro businesses.

On 8 October the Insolvency Service published a report on pre-pack sales in administrations, together with draft regulations imposing a mandatory referral to independent scrutiny in the case of pre-packaged sales to connected parties.

This article, written by Tim Carter and Helen Martin, considers the background to the proposed regulations, their content and their potential impact.

Background

Five years after it refused to pay rent and took the landlord to the High Court, and two years after it was placed into liquidation on account of unpaid rent, the final branch of litigation brought by the directors of Oceanic Palms Limited (in liq) has been cut down by the Supreme Court.

The UK Supreme Court in Bresco Electrical Services Ltd (in liq) v Michael J Lonsdale (Electrical Ltd) [2020] UKSC 25 has decided that the adjudication regime for building disputes is not incompatible with the insolvency process.

In the two judgments, Commissioner of Inland Revenue v Salus Safety Equipment Ltd (in liq) [2020] NZHC 1368 and Commissioner Inland Revenue v Green Securities Ltd (in liq) [2020] NZHC 1371, Associate Judge Bell significantly reduced the amount recoverable in each proceeding by liquidators. 

Both cases considered applications from liquidators to seek approval of their remuneration.  In Salus the amount claimed was $91,600 and in Green Securities it was $159,044.