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Companies Act 1993

Liquidations - Duties, rights, and powers of liquidators

269: Power to disclaim onerous property

You could also call this:

“Liquidators can remove problematic property from the company”

You can get rid of property that is causing problems for the company, even if you’ve already tried to deal with it. This is called disclaiming onerous property.

Onerous property means contracts that aren’t making money, things that are hard to sell, or things that might cost money or be difficult to handle. It can also include legal cases that probably won’t succeed or can’t be paid for with the company’s money.

When you disclaim property, the company stops having any rights or responsibilities for it from that day forward. This doesn’t change other people’s rights, except where it’s needed to free the company from responsibility.

If you disclaim property, you need to tell everyone affected by this decision within 10 working days.

If someone loses out because of the disclaimer, they can ask to be treated as someone the company owes money to. They can also ask the court to give them the property that was disclaimed.

The court can decide to give the property to someone if they think it’s fair to do so.

There are some things that can’t be disclaimed. These include special agreements about financial trades and instructions for settling these trades.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321933.

Topics:
Business > Industry rules
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270: Liquidator may be required to elect whether to disclaim onerous property, or

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Part 16 Liquidations
Duties, rights, and powers of liquidators

269Power to disclaim onerous property

  1. Subject to section 270, a liquidator may disclaim onerous property even though the liquidator has taken possession of it, tried to sell it, or otherwise exercised rights of ownership in relation to it.

  2. For the purposes of this section, onerous property—

  3. means—
    1. an unprofitable contract; or
      1. property of the company that is unsaleable, or not readily saleable, or that may give rise to a liability to pay money or perform an onerous act; or
        1. a litigation right that, in the opinion of the liquidator, has no reasonable prospect of success or cannot reasonably be funded from the assets of the company; but
        2. does not include—
          1. a netting agreement to which sections 310A to 310O apply; or
            1. any contract of the company that constitutes a transaction under a netting agreement; or
              1. a settlement instruction or a settlement under the rules of a designated FMI.

              2. A disclaimer under this section—

              3. brings to an end on and from the date of the disclaimer the rights, interests, and liabilities of the company in relation to the property disclaimed:
                1. does not, except so far as necessary to release the company from a liability, affect the rights or liabilities of any other person.

                  1. A liquidator who disclaims onerous property must, within 10 working days of the disclaimer, give notice in writing of the disclaimer to every person whose rights are, to the knowledge of the liquidator, affected by the disclaimer.

                  2. A person suffering loss or damage as a result of a disclaimer under this section may—

                  3. claim as a creditor of the company for the amount of the loss or damage, taking account of the effect of an order made by the court under paragraph (b):
                    1. apply to the court for an order that the disclaimed property be delivered to or vested in that person.

                      1. The court may make an order under subsection (5)(b) if it is satisfied that it is just that the property should be vested in the applicant.

                      Compare
                      • 1955 No 63 s 312
                      Notes
                      • Section 269(2): replaced, on , by section 7 of the Companies Amendment Act 1999 (1999 No 19).
                      • Section 269(2)(a)(ii): replaced, on , by section 22 of the Companies Amendment Act 2006 (2006 No 56).
                      • Section 269(2)(a)(iii): inserted, on , by section 22 of the Companies Amendment Act 2006 (2006 No 56).
                      • Section 269(2)(b): replaced, on , by section 48(1) of the Reserve Bank of New Zealand Amendment Act 2003 (2003 No 46).
                      • Section 269(2)(b)(iii): replaced, on , by section 163(1) of the Financial Market Infrastructures Act 2021 (2021 No 13).