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Companies Act 1993

Liquidations - The process of liquidation

250: Court may terminate liquidation

You could also call this:

“Court can end the liquidation process if it's fair and justified”

The court can stop a company’s liquidation if it thinks it’s fair and right to do so. This can happen at any time after a liquidator has been appointed.

Different people can ask the court to end the liquidation. These include the liquidator, the person in charge of a company arrangement, a company director or shareholder, anyone else who has the right, a person the company owes money to, the Financial Markets Authority (if the company is involved in financial markets), or the Registrar.

If the person in charge of a company arrangement asks to end the liquidation, the court will look at several things. These include any bad behaviour by company officers, what the people owed money decided about the company arrangement, whether the arrangement would leave the company unable to pay its debts, and anything else the court thinks is important.

The court might ask the liquidator to give them a report about the request to end the liquidation. When the court decides to end the liquidation, it can also make other orders about it.

The person who asked to end the liquidation must give a copy of the court’s decision to the Registrar within 10 working days. When the court ends the liquidation, the company is no longer being liquidated, and the liquidator’s job ends right away or on a date the court chooses.

If someone doesn’t give the court’s decision to the Registrar in time, they’re breaking the law. The punishment for this is set out in section 373(2).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321699.

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Part 16 Liquidations
The process of liquidation

250Court may terminate liquidation

  1. The court may, at any time after the appointment of a liquidator of a company, if it is satisfied that it is just and equitable to do so, make an order terminating the liquidation of the company.

  2. An application under this section may be made by—

  3. the liquidator; or
    1. if the company has executed a deed of company arrangement, the deed administrator; or
      1. a director or shareholder of the company; or
        1. any other entitled person; or
          1. a creditor of the company; or
            1. if the company is a financial markets participant, the FMA; or
              1. the Registrar.

                1. On an application by a deed administrator, the court must have regard to—

                2. any misconduct by the company's officers reported by the deed administrator, the liquidator, or the Registrar; and
                  1. the commercial decision of the creditors in accepting the deed of company arrangement; and
                    1. whether the deed of company arrangement would leave the company insolvent; and
                      1. any other matters that the court thinks fit.

                        1. The court may require the liquidator of the company to furnish a report to the court with respect to any facts or matters relevant to the application.

                        2. The court may, on making an order under subsection (1), or at any time thereafter, make such other order as it thinks fit in connection with the termination of the liquidation.

                        3. Where the court makes an order under this section, the person who applied for the order must, within 10 working days after the order was made, deliver a copy of the order to the Registrar for registration.

                        4. Where the court makes an order under subsection (1), the company ceases to be in liquidation and the liquidator ceases to hold office with effect on and from the making of the order or such other date as may be specified in the order.

                        5. Every person who fails to comply with subsection (5) commits an offence and is liable on conviction to the penalty set out in section 373(2).

                        Notes
                        • Section 250(2): replaced, on , by section 10 of the Companies Amendment Act 2006 (2006 No 56).
                        • Section 250(2)(ea): inserted, on , by section 82 of the Financial Markets Authority Act 2011 (2011 No 5).
                        • Section 250(2A): inserted, on , by section 10 of the Companies Amendment Act 2006 (2006 No 56).