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226: Powers of court in other cases
or “Court can intervene in company mergers to ensure fairness”
You could also call this:

“Explaining key terms used in rules about company debt agreements”

In this part of the law, you’ll find some important words and what they mean. These definitions help you understand the rules about making deals between companies and the people they owe money to.

A ‘company’ doesn’t just mean a local business. It also includes companies from other countries that are registered in New Zealand under Part 18 of this law.

A ‘compromise’ is a special agreement between a company and the people it owes money to. This could mean:

  • Cancelling some or all of the company’s debt
  • Changing the rights of the people the company owes money to, or changing the terms of the debt
  • Changing the company’s rules in a way that affects how likely it is to pay its debts

A ‘creditor’ is someone the company owes money to. This includes:

  • Anyone who could claim money from the company if it went out of business, as explained in section 303
  • Someone who has a special guarantee that the company will pay them back

The ‘proponent’ is the person who suggests the compromise deal. You can find out more about who can do this in section 228.

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Next up: 228: Compromise proposal

or “Suggesting a plan to help a struggling company pay its debts”
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Part 14 Compromises with creditors

227Interpretation

  1. In this Part, unless the context otherwise requires,—

    company includes an overseas company registered under Part 18

      compromise means a compromise between a company and its creditors, including a compromise—

      1. cancelling all or part of a debt of the company; or
        1. varying the rights of its creditors or the terms of a debt; or
          1. relating to an alteration of a company's constitution that affects the likelihood of the company being able to pay a debt

            creditor includes—

            1. a person who, in a liquidation, would be entitled to claim in accordance with section 303 that a debt is owing to that person by the company; and
              1. a secured creditor

                proponent means a person referred to in section 228 who proposed a compromise in accordance with this Part.

                Notes
                • Section 227 company: inserted, on , by section 5 of the Companies Amendment Act 2006 (2006 No 56).
                • Section 227 creditor: replaced, on , by section 28 of the Companies Act 1993 Amendment Act 1994 (1994 No 6).