Appeal Court backs liquidators' clawback

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

Relevant offers

Industries

NZX falls 1 per cent after Brexit result, no panic but could weaken further Investing amid Brexit: Don't try to catch the falling knight Road toll breaks for electric vehicles 'interesting question' NZX listing puts price on NZME Staff made redundant from Port Taranaki Ram-raids force dairy owners to sleep on floor of east Auckland shop Toyota New Zealand moves to electric vehicles - the used car way Gym members fume as doors shut at Hamilton Configure Express NZ cigarette plain packaging law would see Imperial Tobacco sue for compensation Japan a land of opportunities for NZ firms

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