• Skip to primary navigation
  • Skip to main content
  • Skip to footer
Waterstone Insolvency

Waterstone Insolvency

Corporate Insolvency & Recovery Specialists

MENUMENU
  • Home
  • About
    • Our Team
    • What We Believe
    • In-House Model
  • Services
    • Liquidations
    • Receiverships
    • Voluntary Administration
    • Part XIV Compromise
  • Our Work
    • Case Studies
    • Our Judgments
  • Videos
  • Resources
        • News

          • Waterline Newsletter
          • Articles
          • Videos
          • Insolvency Statistics
        • eBooks

          • Debt Hibernation
          • Insolvency 101
          • Directors Risks
          • Voidable Transactions
          • Insolvency Manual
        • Other

          • Forms
          • Technical Terms
          • Solvency Test
  • Contact Us
    • Book an appointment
0800CLOSED
0800CLOSED

THE VEXED QUESTION OF FINES IN A LIQUIDATION

By Greg Sherriff - Updated on January 27, 2021

Whenever I receive notification of a fine incurred before the liquidation, I advise the relevant authority of the liquidation and thereafter ignore the fine. I suspect most of my colleagues in the profession adopt a similar approach. Fines and Penalties are dealt with under Section 308 Companies Act which provides that:

“Nothing in this Part of this Act (Liquidations) limits or affects the recovery of –
(a) A fine imposed on a company, whether before or after the commencement of the liquidation of the company, for the commission of an offence; or
(b) A monetary penalty payable to the Crown imposed on a company by a court, whether before or after the commencement of the liquidation of the company, for the breach of any enactment; or
(c) Costs ordered to be paid by the company in relation to proceedings for the offence or breach.”

Additionally, Section 303(2) states that “Fines, monetary penalties, and costs to which section 308 of this Act applies are not claims that may be admitted against a company in liquidation.”

Exactly where this leaves authorities who have imposed a fine is unclear. How is the fine to be recovered? The Companies Act is unhelpfully silent on this. So, liquidators continue to ignore these fines as there is no apparent process for these to be dealt with by a liquidator as they sit outside the liquidation. One wonders what the intentions of the legislators were when Sections 303 & 308 were drafted. It seems that they had something in mind but then failed to properly express this.

Section 308 seems to imply that authorities could proceed directly against the company, effectively ignoring the liquidation and somehow creating a super-priority. However, this would cause a huge conflict with the process of liquidation which sets out the liquidator’s duties to realise assets and distribute to creditors in the relevant order of priority.

Greg Sherriff, Licenced Insolvency Practitioner
greg@waterstone.co.nz
  • linkedin
  • GET IN TOUCH WITH WATERSTONE

    We offer free 30 minute, no obligation appointments

    BOOK NOW

    Footer

    Quick Links

    • Home
    • Our Team
    • Services
    • Resources
    • Contact Us

    Main Office

    16 Piermark Dr
    Rosedale
    Auckland 0632
    • Facebook
    • LinkedIn

    Postal Address

    PO Box 352
    Shortland Street
    Auckland 1140
    0800CLOSED

    Newsletter

    Stay up to date by subscribing to our newsletter.

    Copyright © 2022 Waterstone Insolvency · Website by Acronym