Directors’ duties to insolvent companies, and the risks
Directors of insolvent companies who fail in their duties, may be held personally liable for losses caused by their actions or injurious omissions. Insolvent companies Firstly, when is a company insolvent? The Companies Act 1993 (the Act) defines a solvent company, using two limbs as when: However, some cases indicate that the primary consideration is […]
NZ business incorporation rate slowdown signals looming surge in liquidations
Statistics indicate a slowing growth rate of registered companies in New Zealand, predicting a potential rise in liquidations. Recent economic and business data reveal a complex landscape for New Zealand businesses. Business indexes such as the Performance of Services Index (PSI) and the Performance of Manufacturing Index (PMI) showed significant weaknesses in June 2024 not […]
Employees of a liquidated company
Many employees have concerns about the company they work for going into liquidation, and whether outstanding salaries will ever be paid. Unfortunately, this is a growing worry among New Zealanders because of the increasing number of national liquidations, largely attributable to the grim economic down-turn post covid. You should know your rights and entitlements should […]
Du Val – Statutory management in context
The director of the Du Val group, Kenyon Clarke, promoted an enviable image of opulence and glamour. Private jets, super cars, champagne and an attempt at a self-funded reality show. Understandably, the recent announcement of Du Val entering statutory management has been a hot topic in the media. So, what is statutory management and was […]
Benefits of a general security agreement
A General Security Agreement (GSA) is a contract between a lender (creditor) and borrower (debtor) providing security to the lender over a borrower’s personal property. In the case of a breach of contract, the lender will have rights in relation to the outlined property. There are several benefits to a GSA, which makes it an […]
Wholesale property development funds in New Zealand: A cautionary guide
Investing in wholesale property development funds can seem like an attractive opportunity. These funds promise returns that are generally higher than term deposit rates, making them attractive to investors seeking better yields. However, it is crucial to understand that these returns are often low compared to the substantial risks they carry. Investors must be aware […]
Hive down: The wrong way, and the right way
Hiving down is a corporate rescue technique which originated in England in the 1950s, the rules for which have been established in New Zealand by several pieces of case law* The term originates from the practice of creating a new honeybee colony, by moving some bees and honey to a new hive. For companies, it is […]
How your company’s corporate governance is relevant to its insolvency
Insolvency processes centre on the rights of the insolvent company’s creditors. Corporate governance is the system of rules, practices, and processes for a company to follow, including mechanisms that keep companies (and their directors) accountable to shareholders, creditors, and other stakeholders. For a SME, whose corporate governance may centre more on accountability to its shareholders […]
How companies sail through a storm and survive
When the economic climate is tough and businesses bear the brunt, it is not uncommon to see companies fully settling their debts, for as little as 15 cents on the dollar, while continuing to trade with a legally binding agreement. What’s more, they are often supported by their creditors, and generally everyone is happy with […]
Landmarks of company and insolvency law: Influential cases and their implications on businesses
Directors have various duties imposed on them, and company law constantly develops on application. While risk is an inherent part of business, it is important to follow the evolution of the company and insolvency law. Particularly how directors’ duties affect company’s financial and trading status. Below are some key takeaways of influential decisions, particularly useful […]
