The UK Supreme Court recently considered the scope of the following tests for whether a company is unable to pay its debts (as set out in section 123(2) of the Insolvency Act 1986):

• The company is unable to pay its debts as they fall due (the "cash-flow test") and
• The value of a company's assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities (the "balance-sheet test").

The Supreme Court confirmed that:

In Hutchins v Edwards [2013] NZHC 336, the High Court declined an application for an adjournment by a debtor who sought further time to liquidate property in order to pay a judgment debt.

In a recent High Court decision, a bank (B) applied to appoint liquidators to the TPS Asset Trust and TPS Asset No2 Trust (Trusts). The defendants had guaranteed loans borrowed from B by their company, both personally and in their capacity as trustees of the Trusts.

The defendants had been found guilty of fraud, tax evasion and attempting to pervert the course of justice in August 2012. In July 2012 the defendants had also been adjudicated bankrupt and their company had been placed in liquidation.

In Gibbston Downs Wines Limited and RFD Finance No 2 Limited v Perpetual Trust Limited HC Christchurch CIV-2010-409-00176 28 May 2012, the High Court considered the effect of registration of a subordination agreement on the respective priority of two perfected security interests registered on the Personal Properties Securities Register (PPSR).

In Wilson v APG Holdings Ltd (In Liquidation), Mrs Rita Wilson (Mrs W) received amounts totalling approximately $1m from APG Holdings Limited (in liquidation) (APG) of which her husband, Mr Terry Wilson (Mr W), was a director.  In a defence against a summary judgment application, Mrs W argued in the HC that the amounts in question were payments of Mr W's salary from APG, that she had not borrowed any money from APG and that the payments did not fall within the scope of section 298(2) of the Companies Act 1993 (CA 93).

In Capital + Merchant Finance Limited (in receivership) v Vision Securities Limited (in receivership) our Wellington commercial litigation team was successful in the Court of Appeal on a defendant's summary judgment application involving the interpretation of a subordination clause in a Security Trust Deed (Deed).

The recent case of Re Armitage, ex parte Established Investments Limited (in liquidation) considered an objection by the Official Assignee to Mr Armitage's automatic discharge from bankruptcy. 

In Katavich v Meltzer & Ors, the court confirmed that pursuant to ss 284 and 321 of the Companies Act 1993 (Act), liquidators can be removed notwithstanding that their final report has been filed and the company is to be struck off the Register.

In our April 2019 newsletter we reported on the High Court judgment in Mainzeal Property Construction Limited (in liq) & Ors v Yan & Ors [2019] NZHC 255.  The directors were ordered to contribute $36m to Mainzeal’s assets to be distributed to creditors.  The Court found that Mr Yan was the most culpable director and had induced the other directors to breach their duties.

The English High Court ruled that prospective emergency legislation to amend insolvency laws due to the COVID-19 pandemic could not prevent liquidation proceedings from being brought.  In Shorts Gardens LLP v London Borough of Camden Council [2020] EWHC 1001 (Ch) applications were made by two companies to restrain local councils from bringing liquidation proceedings in respect of unpaid rates and costs orders.