The director and shareholders of Rayland Investment Ltd (in liq) (the Company) applied to terminate the Company's liquidation. The Court found it appropriate to make that order. At issue, however, was the remuneration claimed by Mr Norrie, the Company's liquidator, which the Court reduced from $39,128 to $15,559.

Mr Norrie was not entitled to remuneration for unnecessary preliminary steps such as consenting to appointment by affidavit and carrying out property searches.

Two High Court decisions setting aside creditors' compromises give new guidance on the parameters of Part 14 of the Companies Act 1993.

The regime:

• cannot require the release of the company's guarantors (but that may not be the case under Part 15), and
• requires separate classes of creditors based on a pragmatic, business-oriented approach with regard to both the legal rights and economic interests of creditors.

No release of the company's guarantors

The liquidators of Marathon Imaging Limited (Marathon) brought a claim against the company's director, Mr Greenhill, for a prejudicial disposition of property under section 346 of the Property Law Act 2007 and a breach of director's duties under the Companies Act 1993.  Marathon had begun defaulting on its tax commitments from 2008 onwards and became insolvent shortly after.  The Greenhill Family Trust (Trust), a secured creditor of Marathon, appointed receivers and the Commissioner of Inland Revenue had Marathon placed into liquidation just three days later.

In CGES Limited (in liquidation and receivership) v Kelly [2016] NZHC 1465, the liquidator of CGES Limited brought claims against the former directors of the company for breaches of duties owed to the company.  The High Court held:

The English High Court in Re Caledonian Ltd considered whether the business practices of two companies justified the winding up of these companies on a just and equitable basis.

Caledonian Ltd and Caledonian Commodities Ltd (Companies) in concert marketed and sold (among other products) carbon credits, rare earth metals and coloured diamonds (Products) to individual investors.

In Petterson v Browne [2016] NZCA 189 a liquidator successfully appealed to the Court of Appeal and obtained orders under sections 295 and 299 of the Companies Act 1993 (Act) for certain payments and security to be set aside. 

​The High Court has issued its first major decision under Part 15A of the Companies Act, rejecting a multi-faceted challenge by Cargill International to the Solid Energy Deed of Company Arrangement (DOCA).

The ruling provides important guidance on the operation of New Zealand’s voluntary administration regime.

Chapman Tripp acted for Solid Energy’s lenders, the fourth respondents in the proceeding.

Background

The Court of Appeal has dismissed an appeal by Steel & Tube Holdings Limited (STH) against the legal basis and quantum of a $750,000 judgment based on a “de facto amalgamation” with its subsidiary company.

The ruling reinforces the message from the High Court that directors must be careful to maintain a subsidiary’s independence if they are to protect the parent against liability for the subsidiary’s debts.

The context

​Directors do not need to consider creditors’ interests when determining the fairness of their own remuneration, even after the company has become insolvent, the Court of Appeal has found.

The facts

The Companies Act 1993 requires that directors who vote to authorise director remuneration must sign a certificate stating that, in their opinion, the payment is fair to the company and setting out the grounds for that opinion.

Mr Kamal was appointed as liquidator of two companies of which the Commissioner of Inland Revenue (CIR) was a creditor.  The CIR applied to the High Court for orders under section 286(5) of the Companies Act 1993 prohibiting Mr Kamal from acting as a company liquidator for a period of up to five years.

In CIR v Kamal [2016] NZHC 1053 the CIR sought the orders on the basis that Mr Kamal was guilty of a continuing breach of his duties as a liquidator that made him unfit to act as a liquidator because: