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.
The Wellington litigation team successfully defended a voidable transaction claim under section 296(3) of the Companies Act 1993 by the liquidators of Contract Engineering Limited in the High Court in Farrell v ACME Engineering Limited [2012] NZHC 2874.
ACME Engineering manufactured and delivered a flash silencer to Contract Engineering in May 2010 and issued an invoice for it. The invoice was paid late and pursuant to a payment plan. Contract was placed into receivership in late 2010 and then into liquidation in July 2011.
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 Carey v Korda receivers had been appointed to companies within the Westpoint Group. The directors of the mortgagor companies were dissatisfied with the receivers' conduct of the receivership and sought (amongst other things) to inspect the invoices from the receivers' legal advisers, Corrs. The receivers objected to producing the invoices on the grounds that they were privileged.
The Court of Appeal has reversed the High Court’s decision in Healy Holmberg Trading Partnership v Grant on a PPSA issue it describes as being of “practical significance”.
If a liquidator is found guilty of stealing money from a company in liquidation, most creditors would assume that he or she could never be a liquidator again. Not in New Zealand. A recent case highlights the need for urgent reform of the regulation of insolvency practitioners.
The lessons to be drawn from the Crafar receivership in relation to the Personal Properties Securities Act (PPSA) have now been distilled by the Court of Appeal, which has largely confirmed the High Court’s reasoning.
We discuss the implications of the litigation.
When insolvency practitioners consider who may be held accountable for corporate failures, auditors are often near the top of the list. It is easy to see why. From a practical perspective, auditors are relatively likely to be able to meet good claims, and from a legal perspective it is easy to identify the duties that the auditors owed and, in an unfortunate number of cases, breached.
Justice Heath issued a sweeping judgment last month limiting the ability of liquidators to examine witnesses and seek documents. In the decision, ANZ National Bank Ltd v Sheahan and Lock [2012] NZHC 3037, the Court also:
The High Court has clarified the extended good faith defence, introduced into the Companies Act in 2007, for creditors facing ‘claw back’ of a payment by liquidators.1
The Court’s interpretation, while good news for creditors, may make it more difficult for liquidators to recover insolvent transactions.
The 2007 amendment to section 296(3)