'Restructuring by numbers' has never been good enough. That is more true now than ever.

Big receiverships often test legal boundaries, and the Crafar group receivership is no exception.  Gibson & Stiassny v StockCo & Ors1  is the longest decision to date on the Personal Property Securities Act 1999 (PPSA). 

Although the facts are complex, the practical take-outs are fairly simple:

The Court of Appeal has overturned a High Court decision, agreeing with receivers that certain sales by the debtor were not in the ordinary course of business, but rather payments to an unsecured creditor.

In this case1 when the debtor began to experience cash flow difficulties, it established another company to purchase stock, which the debtor would find buyers for. Sales were made either in the name of the new company, or the debtor would account to the new company for the sale proceeds.

The Gibson & Stiassny v StockCo & Ors litigation in relation to the Crafar receivership has clarified important aspects of the Personal Property Securities Act 1999 (PPSA).

The procedures seem obvious in the abstract but, as the case demonstrates, can be less obvious on the ground:

It is not uncommon for a receiver, liquidator or competing creditor to be presented with a security agreement, the ink on which appears scarcely to be dry.

If that secured creditor registered on the Personal Property Securities Register (PPSR) months or years earlier, does that registration date determine priority between competing security interests?  Or is that unfair to other creditors?

Bank B sought adjudication in bankruptcy of F.

The residual powers that directors of a company in receivership have to commence a claim by that company without the receivers' consent were recently considered by the High Court.

A recent UK High Court decision on the issue of balance sheet insolvency will be of interest in New Zealand, despite the fact that the respective statutory solvency tests differ.  

The court had made orders for examination of 4 current and former directors of New Image by the liquidators of Omegatrend.

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.