Plain language law

New Zealand law explained for everyone

Companies Act 1993

Compromises with creditors

233: Effect of compromise in liquidation of company

You could also call this:

“How a compromise affects a company in liquidation”

If a compromise is approved under section 230, the court can make decisions about how it affects the company if it goes into liquidation. You, the company, or someone appointed to handle the company’s property can ask the court to do this. If the court allows it, a person who is owed money by the company or owns part of it can also ask.

The court can decide how much of the compromise will still work and if the person in charge of closing down the company has to follow it. This can happen before or after the company goes into liquidation.

If the company does go into liquidation after a compromise is approved, the person closing down the company, someone looking after the company’s property, or (with the court’s permission) someone owed money or owning part of the company can ask the court to make a decision. The court will then decide if the compromise should still work and if the person closing down the company has to follow it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321176.

Topics:
Business > Industry rules
Business > Fair trading
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“Court can assist with company debt arrangements and ensure fairness”

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234: Costs of compromise, or

“Who pays for meetings about company debt compromises”

Part 14 Compromises with creditors

233Effect of compromise in liquidation of company

  1. Where a compromise is approved under section 230, the court may, on the application of—

  2. the company; or
    1. a receiver appointed in relation to property of the company; or
      1. with the leave of the court, any creditor or shareholder of the company,—
          1. make such order as the court thinks fit with respect to the extent, if any, to which the compromise will, if the company is put into liquidation, continue in effect and be binding on the liquidator of the company.

        1. Where a compromise is approved under section 230 and the company is subsequently put into liquidation, the court may, on the application of—

        2. the liquidator; or
          1. a receiver appointed in relation to property of the company; or
            1. with the leave of the court, any creditor or shareholder of the company,—
                1. make such order as the court thinks fit with respect to the extent, if any, to which the compromise will continue in effect and be binding on the liquidator of the company.