If the shareholders of the company believe the company is insolvent then pursuant to s241 Companies Act 1993 they can pass a major transaction (i.e. 75% of shareholders) to place their company into liquidation. The liquidator then proceeds to wrap up the company affairs, realise company assets and distribute funds pursuant to Schedule 7 Companies Act 1993. Over the last ten years Brenton has been involved with hundreds of voluntary liquidations across the South Island, in all sorts of industries.

When a company has ceased trading and is no longer required, in order to wrap up everything tidily, and disburse any capital profits, a solvent liquidation is the best option. The directors sign a resolution to confirm the company is solvent, shareholders appoint a liquidator and the liquidator then wraps everything up and distributes funds. Brenton has completed a number of solvent liquidations for clients.

If a secured creditor has a General Security Agreement (GSA) and a loan is in default then they can appoint a receiver. It is important to ensure that all of the paperwork is in place. The receiver will then realise the assets which are subject to the security and repay the secured creditor. The receiver has various obligations to other creditors at the same time. Brenton has been appointed the receiver on a number of companies and can assist as required.

Sometime a compromise can be reached with a company’s creditors to accept a scheme of arrangement to pay outstanding debts or a portion of those debts. This is never a simple process and involves putting together a proposal, organising a meeting with creditors and appointing a compromise administrator. It can be a useful tool to keep a company operational while it settles its old debts in a timely manner.

A director and/or a shareholder have the ability to appoint an Administrator pursuant to the Companies Act 1993. There is then a moratorium period where a plan or DOCA (Deed of Company Arrangement) is prepared and submitted to creditors for approval. Not very commonly used these days, it is a costly and time consuming exercise. But in some circumstances for larger companies can be a useful mechanism to keep a company trading while a resolution is sought.