The High Court in Cullen Group Limited v Commissioner of Inland Revenue [2019] NZHC 3110 has rejected Cullen Group's attempt to delay payment of half a million dollars in court costs to the Commissioner of Inland Revenue, with Palmer J dismissing the argument that Cullen Group would go into liquidation as a result.
Eric Watson's private investment company, Cullen Group Limited, lost a case in front of Palmer J in March which held that Cullen Group avoided $51.5m of tax. Cullen Group owed Inland Revenue $505,399.55 in court costs.
We have prepared the following tips for businesses to guide them through the current circumstances. Urgent advice should be sought where cash flow problems are arising, or where contractual obligations may not be able to be met. The best protection is preparation.
Talk to the people you deal with
Check in with the people you do business with regularly. This will include:
A recent decision of the High Court of New Zealand provides helpful guidance for insolvency practitioners on how aspects of the voluntary administration regime should operate in the context of the COVID-19 pandemic.
On 30 March 2020, the board of directors of EncoreFX (NZ) Limited resolved to appoint administrators to the company. By then, New Zealand was already at Level 4 on the four-level alert system for COVID-19.
The much anticipated Mainzeal judgment is released
When a debtor has multiple creditors, often it seems as if there is no alternative but to throw in the towel and file for bankruptcy. Bankruptcy does have some advantages in that an individual is released from all his or her existing debts and that in three years (as long as no objection is filed in the Court) is discharged from bankruptcy. There are however downsides to bankruptcy.
On May 24, 2019, New Zealand-based online asset exchange, Cryptopia Limited, filed a petition under Chapter 15 of the United States Bankruptcy Code seeking recognition of its New Zealand liquidation proceeding in the United States. On the same day, the United States Bankruptcy Court for the Southern District of New York granted provisional relief to Cryptopia, including extending the benefits of the automatic stay to prevent creditors or other parties in interest from taking actions to interfere with Cryptopia’s assets.
In Robt. Jones Holdings Limited v McCullagh [2019] NZSC 86, the Supreme Court unanimously held that it is unnecessary for a liquidator to prove that any payment actually diminished the assets of a company to claw back that payment under s 292 of the Companies Act (Act).
Non-party costs are exceptional and are only awarded when it is just to do so and when 'something more' about the non-party's conduct warrants costs. The involvement of a parent company in litigation and avoiding a realistic settlement is an example of the 'something more' requirement being met. In Minister of Education v H Construction North Island Ltd (in req and liq) [2019] NZHC 1459, the High Court found that McConnell Ltd's (McConnell) actions in this litigation warranted awarding non-party costs and disbursements of over a million dollars.
In Robt. Jones Holdings Limited v McCullagh [2019] NZSC 86 the Supreme Court confirmed that the requirements outlined in s 294 Companies Act 1993 (“Act“”) are all that is required in order to void an insolvent transaction. In particular, the Supreme Court confirmed there is no additional common law principle that the transaction must have diminished the net pool of assets available to creditors.
Background
An application by New Zealand Life Care Limited (Life Care) for an order reversing the decision of the Official Assignee to reject its claim for $4.9m in the bankruptcy of Mr Harman was dismissed by the High Court in New Zealand Life Care Ltd v Official Assignee [2018] NZHC 17. Life Care said that Mr Harman had guaranteed loans from Life Care to his companies, but accepted that it did not have a written guarantee signed by Mr Harman. Instead it relied on Mr Harman's admission of the guarantee in affidavits made after his adjudication.