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Companies Act 1993

Voluntary administration - Creditors' meetings generally

239AM: Related creditor’s vote disregarded unless court orders otherwise

You could also call this:

“Court approval needed for related creditors' votes in company administration”

When a company is in administration, the administrator must ignore votes from related creditors at creditors’ meetings, unless a court says otherwise. A related creditor is someone who has a close connection to the company, like a director, shareholder, or family member of these people.

If you’re a related creditor and you want your vote to count, you need to tell the administrator in writing before the vote happens. You must say that you’re a related creditor and that you’re going to ask the court to let your vote count. Then, within 10 working days after the meeting, you need to apply to the court.

The court will only let your vote count if it thinks that counting your vote won’t hurt the interests of all the creditors or a group of creditors. The court will also check if counting your vote would be unfair to the other creditors who voted differently from you. They’ll look at things like what you might gain from the vote, your relationship with the company, and any other important factors.

There are many types of related creditors, including people who started the company, family members of directors or shareholders, companies connected to the company in administration, and even some people who benefit from trusts connected to the company.

For more information about related creditors and their votes, you can look at sections 239AMA to 239AMC of this Act.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321536.

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239AMA: Creditor’s vote disregarded if administrator considers creditor is related creditor, or

“Administrator can disregard votes from creditors they believe are related to the company”

Part 15A Voluntary administration
Creditors' meetings generally

239AMRelated creditor’s vote disregarded unless court orders otherwise

  1. The administrator must disregard a related creditor’s vote on a resolution at the creditors’ meeting unless the court orders otherwise.

  2. A related creditor may apply to the court for an order that its vote be taken into account.

  3. A related creditor that intends to apply for an order must,—

  4. before a vote is taken on the resolution, give notice in writing to the administrator that the creditor—
    1. is a related creditor; and
      1. intends to apply to the court for an order that its vote be taken into account; and
      2. within 10 working days of the creditors’ meeting, make an application to the court.

        1. The court may order that a related creditor’s vote be taken into account only if satisfied that ordering that the applicant’s vote (or the applicants’ votes) be taken into account—

        2. is not contrary to the interests of the creditors, or a class of creditors, as a whole; and
          1. will not prejudice, and is not reasonably likely to prejudice, the interests of the creditors who voted against the resolution or for it, as the case may be, to an extent that is unreasonable having regard to—
            1. the benefits accruing to the applicant (or the applicants), or to some or all of the related creditors, from the resolution or from the failure to pass the resolution; and
              1. the nature of the relationship between the applicant (or the applicants) and the company, or between the related creditors and the company; and
                1. any other relevant matter.

                2. In this section and sections 239AMA to 239AMC,—

                  related creditor means a creditor who is a related entity of the company in administration

                    related entity means, in relation to the company in administration,—

                    1. a promoter; or
                      1. a relative or spouse of a promoter; or
                        1. a relative of a spouse of a promoter; or
                          1. a director or shareholder; or
                            1. a relative or spouse of a director or shareholder; or
                              1. a relative of a spouse of a director or shareholder; or
                                1. a related company; or
                                  1. a beneficiary under a trust of which the company in administration is or has at any time been a trustee; or
                                    1. a relative or spouse of that beneficiary; or
                                      1. a relative of a spouse of that beneficiary; or
                                        1. a company one of whose directors is also a director of the company in administration; or
                                          1. a trustee of a trust under which a person (A) is a beneficiary, if A is a related entity of the company in administration under this subsection.

                                          Compare
                                          • Corporations Act 2001 s 600A (Aust)
                                          Notes
                                          • Section 239AM: inserted, on , by section 6 of the Companies Amendment Act 2006 (2006 No 56).
                                          • Section 239AM heading: replaced, on , by section 12(1) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                          • Section 239AM(1): replaced, on , by section 12(2) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                          • Section 239AM(2): replaced, on , by section 12(2) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                          • Section 239AM(2A): inserted, on , by section 12(2) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                          • Section 239AM(2B): inserted, on , by section 12(2) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                          • Section 239AM(3): amended, on , by section 12(3) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                          • Section 239AM(3) promoter: repealed, on , by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).