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Companies Act 1993

Liquidations - Duties, rights, and powers of liquidators

272: Guidelines for orders

You could also call this:

“Rules for the court when deciding on orders about related companies”

When a court decides if it’s fair to make an order under section 271(1)(a), they need to think about a few things. They look at how much the related company was involved in running the company that’s being closed down. They also consider how the related company acted towards the people owed money by the company being closed. The court checks if the related company’s actions led to the company being closed down. They can also think about other things they believe are important.

If the court is deciding about an order under section 271(1)(b), they think about similar things, but for all the companies involved. They look at how much each company was involved in managing the others. They consider how each company treated the people owed money by the other companies. The court checks if any company’s actions led to another company being closed down. They also look at how much the companies’ businesses were mixed together. Like before, they can consider other things they think matter.

Just because people owed money by a company being closed down trusted that another company was related to it, doesn’t mean the court will make an order under section 271. This isn’t a good enough reason on its own.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321940.

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“Notify liquidator and creditors about application for related company order”

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273: Certain conduct prohibited, or

“Prohibited actions during company liquidation”

Part 16 Liquidations
Duties, rights, and powers of liquidators

272Guidelines for orders

  1. In deciding whether it is just and equitable to make an order under section 271(1)(a), the court must have regard to the following matters:

  2. the extent to which the related company took part in the management of the company in liquidation:
    1. the conduct of the related company towards the creditors of the company in liquidation:
      1. the extent to which the circumstances that gave rise to the liquidation of the company are attributable to the actions of the related company:
        1. such other matters as the court thinks fit.

          1. In deciding whether it is just and equitable to make an order under section 271(1)(b), the court must have regard to the following matters:

          2. the extent to which any of the companies took part in the management of any of the other companies:
            1. the conduct of any of the companies towards the creditors of any of the other companies:
              1. the extent to which the circumstances that gave rise to the liquidation of any of the companies are attributable to the actions of any of the other companies:
                1. the extent to which the businesses of the companies have been combined:
                  1. such other matters as the court thinks fit.

                    1. The fact that creditors of a company in liquidation relied on the fact that another company is, or was, related to it is not a ground for making an order under section 271.

                    Compare
                    • 1955 No 63 s 315C
                    • 1980 No 43 s 30