Fairfield Sentry Limited (Sentry) was a "feeder fund" that placed 95% of its investments into BLMIS.  When BLMIS was discovered to be a Ponzi scheme, Sentry suspended redemptions of its shares and went into liquidation.  Here, Sentry's liquidators sought to have redemptions paid to the defendant investors prior to the suspension returned to Sentry's fund on the grounds that the redemptions were paid under a mistake because Sentry's net asset value (NAV) was "little better than nil" due to the Ponzi scheme.

The issues were:

The Court of Appeal in Vance v Huhtamaki New Zealand Limited considered the ability of a receiver to limit his or her personal liability for post-receivership contracts under section 32 of the Receiverships Act 1993.

Justice Ellis recently confirmed the position applicable when a bankrupt applies for a stay of the decision adjudicating the debtor bankrupt pending appeal.

Mr Cary had been made bankrupt on 12 September 2011 as a result of a long outstanding debt to Trustees Executors Limited.  His opposition to the bankruptcy was based solely on the fact that Mr Cary thought he should be given more time to advance a proposal to creditors under Part 5 of the Insolvency Act 2006.  This was rejected by the Court for a variety of reasons, and the adjudication order made.

In Perpetual Trustee Company Limited v Downey & Black, the High Court discussed the effect of the liquidation process on a choice of forum clause in a commercial contract.  It found that as the subject company, HIH, had been placed into liquidation, the choice of forum clause between HIH and Perpetual (which designated the New South Wales Courts as the forum for resolution of disputes) did not automatically operate.  Instead, the question became whether the New Zealand or NSW courts were the more appropriate venue.

In the High Court decision of Herbert v Allied Nationwide Finance Limited & Others, the Court declined to approve a creditor's proposal under the Insolvency Act 2006 on the grounds that the terms were not reasonable and not calculated to benefit the general body of creditors.

InThe Commissioner of Inland Revenue v Blackmore Trust Ltd, Blackmore tried to stave off liquidation for the sum of $1.4 million owed to the IRD.  After six or seven adjournments, Blackmore finally put evidence before the Court (albeit through its lawyer, rather than by affidavit) claiming that its liabilities totalled $15.6 million, and its sole asset, the James Smith building in the Wellington CBD, was valued at $21.5 million as a going concern, or $11 million - $13 million in a "fire sale".

In our October 2010 insolvency legal update, we reviewed the case of South Canterbury Finance Ltd v Nielsen, where the Court found in favour of second mortgagee, SCF, on the interpretation of a deed of priority.  That case was appealed successfully to the Court of Appeal by the first mortgagee, ASB.  This update provides a brief review of the Court of Appeal's reasoning.

In Official Assignee v Spencer, Mr Spencer's bankruptcy period was extended from three to six years due to his conduct and failure to comply with his obligations under the Insolvency Act 1967 (Act). 

Mr Spencer was adjudicated bankrupt for the second time in August 2007 and was due to be discharged from bankruptcy in 2010.  However, the Official Assignee objected to Mr Spencer's discharge and asked the Court to exercise its discretion and decline to order the discharge.

In Grant v Commissioner of Inland Revenue, the Court of Appeal took little time to uphold a High Court decision that a deed of company arrangement (DOCA) under Part 15A of the Companies Act 1993 was void.

At the creditors meeting, the DOCA had been approved by the majority of creditors in number. Nevertheless, this did not constitute 75% of creditors in value. Mr Grant, as chair of a creditors' meeting, purported to exercise a casting vote in favour of the DOCA in order for it to be approved. 

Managh v Morrison and Ors involved an application by a liquidator to set aside a transaction pursuant to section 292 of the Companies Act 1993.  Approximately one year before liquidation the company assigned causes of action against a firm of solicitors and a real estate agent to a trust associated with the company's director.