Appeal Court backs liquidators' clawback

MARIA SLADE
Last updated 05:00 30/03/2013

Relevant offers

Industries

BMW and Charge Net to create 'electric highway' in NZ by 2018 Trade Me bids on New World Little Garden set reach more than $150 Disney said to be working with adviser on bid to buy Twitter Auckland roading contracts awarded on bribes and corruption, Crown says Hellaby takeover would create Australia's leading automotive market company Rocket Lab's Mahia launch site prepared for takeoff Privacy commissioner John Edwards weighs in on Yahoo hack Technology hubs putting Auckland on the map Daylight saving a 'non-event', especially compared to school holidays, EMA says Hewlett-Packard draws the line on 'non-genuine' printer cartridges

The Court of Appeal has backed liquidators' power to claw back payments made by an insolvent company up to two years before its collapse.

Three High Court decisions last year undid a commonly held belief about voidable transactions, where a liquidator can order a creditor to repay money received from a troubled firm.

The voidable transaction process is designed to prevent creditor queue jumping. A creditor can defend against a claim if it can prove it acted in good faith in accepting the payment, had no reason to suspect the business it was trading with was in trouble and gave value for the funds received.

The High Court ruled a creditor should not be disadvantaged just because it provided its services before being paid, as many suppliers did.

The High Court decisions meant voidable transactions would be virtually unenforceable and so appeals were lodged. Fairfax NZ

Ad Feedback

- BusinessDay.co.nz

Special offers

Featured Promotions

Sponsored Content