Plain language law

New Zealand law explained for everyone

 Plain Language Law homepage
Back to
285: Meaning of failure to comply
or “What counts as not following the rules for liquidators”
You could also call this:

“Court can order liquidators to do their job properly or remove them”

If a liquidator isn’t doing their job properly, you can ask the court to make them do it. You, or someone else involved with the company, can apply to the court for an order. This could be a liquidator, someone who wants to be a liquidator, a liquidation committee, a creditor, a shareholder, a director, a receiver, or even the Registrar.

Before you can apply, you need to tell the liquidator about the problem at least 5 working days before you go to court. If the court agrees there’s a problem, they can do a few things. They might say the liquidator doesn’t have to do that job, or they might order the liquidator to do it. They could also remove the liquidator from their position or stop them from being a liquidator in the future.

If someone isn’t allowed to be a liquidator, the court can remove them. But they can also say it’s okay for that person to be a liquidator even if they’re not usually allowed.

If a liquidator keeps failing to do their job, or if they do something really serious, the court must stop them from being a liquidator. This ban could be forever, or for a set time. The court only makes it permanent or longer than 10 years for the worst cases.

If you’re banned, you can’t work as an insolvency practitioner anymore. The court can give more time to fix the problem, add conditions, or make other orders too.

After the court makes an order, the person who asked for it must tell the Registrar by the end of the next working day. The Registrar then tells all the official insolvency groups about it.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

Next up: 287: Meaning of inability to pay debts

or “When a company is considered unable to pay its debts”
Next

Part 16 Liquidations
Appointment and supervision of liquidators

286Orders to enforce liquidator's duties

  1. An application for an order under this section may be made by—

  2. a liquidator:
    1. a person seeking appointment as a liquidator:
      1. a liquidation committee:
        1. a creditor, shareholder, other entitled person, or a director of the company in liquidation:
          1. a receiver appointed in relation to property of the company in liquidation:
            1. if the liquidator is a qualified statutory accountant (within the meaning of section 5(1) of the Financial Reporting Act 2013), a member of the governing body of the association of accountants of which the qualified statutory accountant is a member:
              1. if the liquidator is a barrister and solicitor or a solicitor, the President of the New Zealand Law Society:
                1. an Official Assignee:
                  1. the Registrar.

                    1. No application may be made to a court by a person other than a liquidator in relation to a failure to comply unless notice of the failure to comply has been served on the liquidator not less than 5 working days before the date of the application and, as at the date of the application, there is a continuing failure to comply.

                    2. If the court is satisfied that there is, or has been, a failure to comply, the court may—

                    3. relieve the liquidator of the duty to comply wholly or in part; or
                      1. order the liquidator to comply to the extent specified in the order; or
                        1. remove the liquidator from office; or
                          1. make a prohibition order.

                            1. A court may, in relation to a person who is or becomes disqualified under section 280(2) from becoming or remaining a liquidator,—

                            2. remove the person from office; or
                              1. order that the person may be appointed and act, or may continue to act, as a liquidator, despite section 280(2).

                                1. If the court is satisfied that a person is unfit to act as a liquidator by reason of persistent failures to comply or the seriousness of a failure to comply, the court must make a prohibition order.

                                2. The period of a prohibition order under this section is a matter for the discretion of the court, and the court may make a prohibition order permanent.

                                3. However, the court may make a prohibition order permanent, or for a period longer than 10 years, only in the most serious of cases for which an order may be made.

                                4. A person to whom a prohibition order applies—

                                5. must not act (or continue to act) as an insolvency practitioner; and
                                  1. must be treated as if they are not a licensed insolvency practitioner (see section 8 of the Insolvency Practitioners Regulation Act 2019).

                                    1. Evidence that, on 2 or more occasions,—

                                    2. a court has made an order to comply under this section in respect of the same person; or
                                      1. an application for an order to comply under this section has been made in respect of the same person and that in each case the person has complied after the making of the application and before the hearing,—
                                          1. is, in the absence of special reasons to the contrary, evidence of persistent failures to comply for the purposes of this section.

                                        1. In making an order under this section a court may, if it thinks fit,—

                                        2. make an order extending the time for compliance; or
                                          1. impose a term or condition; or
                                            1. make an ancillary order.

                                              1. A copy of every order made under this section must be delivered by the applicant to the Registrar before the end of the working day after the day on which the order was made.

                                              2. The Registrar must provide a copy of the order to each accredited body (within the meaning of the Insolvency Practitioners Regulation Act 2019) before the end of the working day after the day on which the Registrar receives a copy of the order.

                                              Notes
                                              • Section 286(1)(f): replaced, on , by section 17 of the Financial Reporting Amendment Act 2014 (2014 No 64).
                                              • Section 286(1)(i): inserted, on , by section 52(1) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                              • Section 286(3): replaced, on , by section 52(2) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                              • Section 286(4): replaced, on , by section 52(2) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                              • Section 286(5): replaced, on , by section 52(2) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                              • Section 286(5A): inserted, on , by section 52(2) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                              • Section 286(5B): inserted, on , by section 52(2) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                              • Section 286(6): replaced, on , by section 52(3) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                              • Section 286(7): amended, on , by section 26(2) of the Companies Amendment Act 2006 (2006 No 56).
                                              • Section 286(9): replaced, on , by section 52(4) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).
                                              • Section 286(10): inserted, on , by section 52(4) of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).