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Companies Act 1993

Liquidations - Recovery in other cases

301: Power of court to require persons to repay money or return property

You could also call this:

“Court can order people to return money or property to a company being closed down”

When a company is being closed down, the court can look into the actions of people who helped start the company or ran it. This includes past or current directors, managers, administrators, liquidators, or receivers. If the court thinks these people have misused or kept company money or property, or if they’ve been careless or not done their job properly, it can take action.

The court can investigate what these people did. It can order them to give back money or property, with interest. It can also make them pay money to make up for any damage they caused.

If a person owes money to the company, the court can order them to pay it directly to someone the company owes money to.

Even if what the person did was against the law, the court can still make these orders.

When the court orders someone to pay money, it’s treated as a final decision, just like in bankruptcy cases.

If the court is looking at the actions of a past or current director, it will consider any steps they took to get an administrator appointed to help the company when it was in trouble.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM322323.

Topics:
Business > Industry rules
Business > Fair trading
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Part 16 Liquidations
Recovery in other cases

301Power of court to require persons to repay money or return property

  1. If, in the course of the liquidation of a company, it appears to the court that a person who has taken part in the formation or promotion of the company, or a past or present director, manager, administrator, liquidator, or receiver of the company, has misapplied, or retained, or become liable or accountable for, money or property of the company, or been guilty of negligence, default, or breach of duty or trust in relation to the company, the court may, on the application of the liquidator or a creditor or shareholder,—

  2. inquire into the conduct of the promoter, director, manager, administrator, liquidator, or receiver; and
    1. order that person—
      1. to repay or restore the money or property or any part of it with interest at a rate the court thinks just; or
        1. to contribute such sum to the assets of the company by way of compensation as the court thinks just; or
        2. where the application is made by a creditor, order that person to pay or transfer the money or property or any part of it with interest at a rate the court thinks just to the creditor.

          1. This section has effect even though the conduct may constitute an offence.

          2. An order for payment of money under this section is deemed to be a final judgment within the meaning of section 17(1)(a) of the Insolvency Act 2006.

          3. In making an order under subsection (1) against a past or present director, the court must, where relevant, take into account any action that person took for the appointment of an administrator to the company under Part 15A.

          Compare
          • 1955 No 63 s 321
          • 1980 No 43 s 33
          Notes
          • Section 301(1): amended, on , by section 14(1) of the Companies Amendment Act 2006 (2006 No 56).
          • Section 301(1)(a): amended, on , by section 14(1) of the Companies Amendment Act 2006 (2006 No 56).
          • Section 301(3): amended, on , by section 445 of the Insolvency Act 2006 (2006 No 55).
          • Section 301(4): inserted, on , by section 14(2) of the Companies Amendment Act 2006 (2006 No 56).