Plain language law

New Zealand law explained for everyone

Companies Act 1993

Liquidations - Company unable to pay its debts

288: Evidence and other matters

You could also call this:

“Rules for using evidence to prove a company can't pay its debts”

If you want to use evidence that a company didn’t follow a statutory demand to show it can’t pay its debts, you need to ask the court to put the company into liquidation within 30 working days after the last date the company was supposed to comply with the demand.

You can still use other ways to prove a company can’t pay its debts, even if you don’t use the evidence about not following a statutory demand.

The court can use information or records gathered under section 178 as proof that a company can’t pay its debts. If the court says it’s okay, they can also use information from section 179.

When deciding if a company can’t pay its debts, the court can look at debts the company might have to pay in the future, not just the ones they owe right now.

If you’re owed money by a company, but the debt isn’t due yet or might not happen, you can still ask the court to put the company into liquidation because it can’t pay its debts. But you need to get special permission from the court first. The court will only give you permission if you can show there’s a good reason to think the company really can’t pay its debts. The court might add some conditions when they give you permission.

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 It might be out of date or be missing some parts.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

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM321969.

Topics:
Business > Industry rules
Business > Fair trading
Crime and justice > Courts and legal help
Previous

287: Meaning of inability to pay debts, or

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

Next

289: Statutory demand, or

“A formal written request for a company to pay its debts”

Part 16 Liquidations
Company unable to pay its debts

288Evidence and other matters

  1. On an application to the court for an order that a company be put into liquidation, evidence of failure to comply with a statutory demand is not admissible as evidence that a company is unable to pay its debts unless the application is made within 30 working days after the last date for compliance with the demand.

  2. Section 287 does not prevent proof by other means that a company is unable to pay its debts.

  3. Information or records acquired under section 178 or, if the court so orders, under section 179, may be received as evidence that a company is unable to pay its debts.

  4. In determining whether a company is unable to pay its debts, its contingent or prospective liabilities may be taken into account.

  5. An application to the court for an order that a company be put into liquidation on the ground that it is unable to pay its debts may be made by a contingent or prospective creditor only with the leave of the court; and the court may give such leave, with or without conditions, only if it is satisfied that a prima facie case has been made out that the company is unable to pay its debts.