Plain language law

New Zealand law explained for everyone

Companies Act 1993

Voluntary administration - Execution and effect of deed of company arrangement

239ACT: Extent to which deed binds creditors

You could also call this:

“How a deed of arrangement affects people the company owes money to”

When a company makes a deed of arrangement, it affects all the people the company owes money to. This applies to any money owed on or before a specific date mentioned in the deed.

If you’re someone the company owes money to and you have a special right to collect that money (like a security), you can still use that right. But there are two exceptions:

  1. If you agreed to the deed at a special meeting, the deed might limit your rights.
  2. A court might make an order that limits your rights.

If you own or rent out property to the company, your rights over that property are usually not affected. But again, there are two exceptions:

  1. If you agreed to the deed at the special meeting, the deed might change your rights.
  2. A court might make an order that changes your rights.

Remember, the special meeting mentioned here is called a watershed meeting. It’s where people the company owes money to decide whether to accept the deed of arrangement.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321602.

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239ACS: Who is bound by deed, or

“Who must follow a company's deed of arrangement”

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“Deed-bound people can't liquidate or sue company during arrangement”

Part 15A Voluntary administration
Execution and effect of deed of company arrangement

239ACTExtent to which deed binds creditors

  1. A deed of company arrangement binds all creditors in respect of claims that arise on or before the cut-off day (see section 239ACN(2)(i)) specified in the deed.

  2. This section does not prevent a secured creditor from enforcing or otherwise dealing with the charge, except so far as—

  3. the deed provides otherwise in relation to a secured creditor who at the watershed meeting voted in favour of the resolution as a result of which the company executed the deed; or
    1. the court orders otherwise under section 239ACV(1)(a).

      1. This section does not affect a right that an owner or lessor of property has in relation to that property, except so far as—

      2. the deed provides otherwise in relation to an owner or lessor of property who at the watershed meeting voted in favour of the resolution as a result of which the company executed the deed; or
        1. the court orders otherwise under section 239ACV(1)(b).

          Compare
          • Corporations Act 2001 s 444D (Aust)
          Notes
          • Section 239ACT: inserted, on , by section 6 of the Companies Amendment Act 2006 (2006 No 56).