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Companies Act 1993

Voluntary administration - Rights of secured creditor, owner, or lessor

239ABM: If enforcement of charges begins before administration

You could also call this:

“What happens if someone starts enforcing a charge before a company goes into administration”

If someone starts to enforce a charge on a company’s property before the company goes into administration, they can continue to do so even after the administration begins. This applies if the person has already taken control of the property, agreed to sell it, arranged for it to be auctioned, asked for tenders to buy it, or used any other power related to the property.

The rule that usually stops people from enforcing charges during administration doesn’t apply in this case. The person can keep enforcing the charge on the property.

Also, the rule that usually makes transactions invalid if they affect the company’s property during administration doesn’t apply here. This means that any deals or actions related to the property are still valid if they’re done by the person enforcing the charge, or by a receiver they’ve appointed.

Remember, these rules only apply if the person started enforcing the charge before the company went into administration. If you want to know more about what usually happens during administration, you can check section 239ABC. For more information about transactions during administration, you can look at section 239Z.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321566.

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Part 15A Voluntary administration
Rights of secured creditor, owner, or lessor

239ABMIf enforcement of charges begins before administration

  1. This section applies if, before the beginning of the administration of a company, a secured creditor, receiver, or other person, for the purpose of enforcing a charge over the property,—

  2. entered into possession, or assumed control, of the property of the company; or
    1. entered into an agreement to sell the property; or
      1. made arrangements for the property to be offered for sale by public auction; or
        1. publicly invited tenders for the purchase of the property; or
          1. exercised any other power in relation to the property.

            1. Nothing in section 239ABC prevents the secured creditor, receiver, or other person from enforcing the charge in relation to the property.

            2. Section 239Z does not apply in relation to a transaction or dealing that affects the property and is entered into, as the case may be,—

            3. in the exercise of a power of the secured creditor as secured creditor; or
              1. in the performance or exercise of a function or power of the receiver or other person.

                Compare
                • Corporations Act 2001 s 441B (Aust)
                Notes
                • Section 239ABM: inserted, on , by section 6 of the Companies Amendment Act 2006 (2006 No 56).