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Companies Act 1993

Voluntary administration - Set-off and netting agreements

239AEG: Mutual credit and set-off

You could also call this:

“Balancing debts and credits between a company and its creditors under a deed of company arrangement”

When a company is under a deed of company arrangement, and someone wants to make a claim against the company, there are special rules about how to handle debts and credits between them. You need to look at all the dealings between the company and the person making the claim. This includes any money they owe each other or any other business they’ve done together.

You have to add up everything the company owes the person and everything the person owes the company. Then, you subtract the smaller amount from the bigger amount. This is called “setting off” the debts against each other.

The final amount left after this calculation is the only amount that can be included in the claim under the deed of company arrangement. If it turns out the company owes money, that’s the amount the person can claim. If the person owes money to the company, that’s what they need to pay.

This rule helps make sure that all the dealings between the company and the person are fairly considered when working out what’s owed under the deed of company 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=DLM321648.

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Part 15A Voluntary administration
Set-off and netting agreements

239AEGMutual credit and set-off

  1. Where there have been mutual credits, mutual debts, or other mutual dealings between a company and a person who seeks or, but for the operation of this section, would seek to have a claim admitted under a deed of company arrangement,—

  2. an account must be taken of what is due from one party to the other in respect of those credits, debts, or dealings; and
    1. an amount due from one party must be set off against an amount due from the other party; and
      1. only the balance of the account may be admitted under the deed of company arrangement, or is payable to the company, as the case may be.

        Notes
        • Section 239AEG: inserted, on , by section 6 of the Companies Amendment Act 2006 (2006 No 56).