Insolvency Options

In New Zealand, insolvency law and practice can be divided as follows:

§         insolvencies applying to individuals, normally termed ‘bankruptcies’;

§         insolvencies applying to companies, for which the terminology varies according to the nature of the appointment.

A corporate insolvency may take one or more of the following forms:

§         receivership, usually initiated by a secured creditor;

§         voluntary administrations, usually initiated by the board of directors;

§         liquidation, which may be by order of the Court, or which may follow an initiative taken by the company;

§         compromises without or with sanction of the Court;

§         statutory management, appointed by Order in Council.

Corporate insolvencies are governed by:

§         the Receiverships Act 1993;

§         the Companies Act 1993 and its amendments;

§         the Companies Liquidation Regulations 1994;

§         the Corporations (Investigation and Management) Act 1989.

Individual bankruptcies are governed by the Insolvency Act 1967 and its amendments.

Corporations (Investigations and Management) Act

This legislation was designed to deal with complex corporate insolvencies which could not be dealt with satisfactorily under the provisions of the Companies Act and where the interests of all creditors were at stake.  The Governor General may appoint one or more persons as Statutory Manager(s) of a company or group of companies.  A statutory manager has wide powers to deal with a company’s affairs and the Act effectively suspends the powers and rights of all creditors including secured creditors.

Individual bankruptcies

In practice, the Official Assignee administers the affairs of individual bankrupts.

Chartered accountants may act as trustees in a compromise which avoids bankruptcy.

 

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