In a judgment issued yesterday (Francis v Gross [2024] NZCA 528), the Court of Appeal unanimously overturned the controversial High Court decision in Francis v Gross [2023] NZHC 1107 and held that purchasers of partly constructed modular buildings (pods) did not have equitable liens (at all, and especially not in priority to secured creditors) over those pods.

This morning, after much anticipation, the Supreme Court has released its judgment in Yan v Mainzeal Property Construction Limited (in liq) [2023] NZSC 113, largely upholding the Court of Appeal's decision, and awarding damages of $39.8m against the directors collectively, with specified limits for certain directors. The decision signals that a strong emphasis on 'creditor protection' is now embedded in New Zealand company law.

In recent years much ink has been spilled opining on the so called 'Quincecare' duty of care, and the limits of it (see links to our recent insolvency law updates covering the topic below). The judgment in Barclays Bank plc v Quincecare Ltd [1992] 4 All ER 363 was a first instance decision on Steyn J, in which he found that a bank has a duty not to execute a payment instruction given by an agent of its customer without making inquiries if the bank has reasonable grounds for believing that the agent is attempting to defraud the customer.

This article was first published on India Business Law Journal on 22 June 2023.

In M Suresh Kumar Reddy v Canara Bank and Ors, the Supreme Court clarified that its observations inVidarbha Industries Power Limited v Axis Bank Limited were restricted to the particular facts of that case. Therefore, except in exceptional circumstances, National Company Law Tribunals (NCLT) must admit applications under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC), once the existence of a debt and default is established.

AML changes for court-appointed liquidators

Important changes for court-appointed liquidators to the regulations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (Act) will come into force on 9 July 2021.  These changes provide that, for a court-appointed liquidator:

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.

The COVID-19 pandemic has led successful resolution applicants to seek withdrawals of, or modifications to, approved resolution plans. This article examines the Supreme Court’s recent judgment on claims of force majeure in the resolution process of Amtek Auto.

This update deals with the significant appeal judgment released yesterday by the Court of Appeal in the proceedings brought by the liquidators of Mainzeal Property and Construction Ltd (in Liq) (Mainzeal) against its directors. Our previous legal updates on the High Court decisions can be found here and here.

The Insolvency and Bankruptcy Code, 2016 (Code) was enacted to enable corporate insolvency resolution of financially stressed corporate debtors in a time bound manner, so as to maximise the value of their assets. The decision to rehabilitate or liquidate a corporate debtor lies with the committee of creditors (Committee), comprising the corporate debtor’s financial creditors. The Code allows the Committee sufficient freedom and flexibility to explore, negotiate and, subsequently, choose the most suitable option for the corporate debtor.

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.