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The Companies Amendment Act 2006 implemented on 1 November 2007 increases the transparency and accountability of Insolvency Practitioners and means significant changes to the administration of Insolvencies. The key changes are as follows:
•Liquidation by Shareholder appointment allowed within a 10 day time frame from the date of service of a winding up application.
•Phoenix Companies - where a new company is formed using the name, similar name or trading name of a failed company, directors can be made personally liable for the debts of the failed company.
•More disclosure required of liquidators.
•Further Grounds of Liquidator Disqualification - in line with the ethics of NZICA. A person who has, or whose firm has within the two years immediately before the commencement of the liquidation provided accounting services to the company or who has had a continuing business relationship with the company, its majority shareholder, or any of its secured creditors is now disqualified.
•Fighting Fund - the liquidator must pay to any creditor who protects, preserves the value of, or recovers assets of the company for the benefit of the company's creditors by the payment of money or the giving of an indemnity, the amount received by the liquidator by the realisation of those assets, up to the value of that creditor's unsecured debt; and costs incurred.
•Voluntary Administration - provides a moratorium period during which the future of a company can be assessed by an independent party. This is usually a pathway to liquidation or a compromise (deed of company arrangement).
•Voidable Transactions - uncertainty regarding certain key tests have been reduced.
•The Accountants Lien - the preferential claim in lieu of a lien changes from $500 to 10% of the debt up to a maximum of $2,000.
DISCLAIMER
This article is intended to provide general information and should not be construed as advice of any kind. Parties who require clarification on issues raised in this article should take their own advice.