Plain language law

New Zealand law explained for everyone

 Plain Language Law homepage
Back to
310I: Set-off under netting agreement not affected by notice under section 294
or “Netting agreements remain valid despite transaction notices”
You could also call this:

“Court can cancel deals between a company and related people if the company is in trouble”

The court can cancel a bilateral netting agreement between a company and a related person if the liquidator asks. This can happen if:

You made the agreement with someone related to the company when you signed it. The agreement was made during a specific time called the restricted period. The related person can’t prove they didn’t think the company was in financial trouble when they made the agreement.

The court can also make other orders to make sure the cancellation works properly.

A related person can be a director of the company, someone close to a director, someone who controls the company, or another company controlled by a director or someone close to them.

The restricted period is explained in section 310(7).

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 It might be out of date or be missing some parts.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: 310K: Certain persons may be declared to be recognised clearing houses

or “The Bank can officially recognise organisations that handle payment clearing”
Next

Part 16 Liquidations
Creditors' claims

310JCourt may set aside bilateral netting agreement between company and related person

  1. The court may order, on the application of a liquidator, that a bilateral netting agreement entered into by a company be set aside as against the liquidator of the company if—

  2. the netting agreement is between the company and a person who was a related person at the time that the netting agreement was entered into; and
    1. the netting agreement was entered into within the restricted period; and
      1. the related person does not prove that, at the time the netting agreement was entered into, the related person did not have reason to suspect that the company was unable to pay its debts as they became due.

        1. The court may make any other orders it thinks proper for the purpose of giving effect to an order under subsection (1).

        2. In this section, unless the context otherwise requires,—

          related person, in relation to the company in liquidation, means—

          1. a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or
            1. a person, or a relative of a person, who has control of the company; or
              1. another company that is controlled by a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or
                1. a related company

                  restricted period has the same meaning as in section 310(7).

                  Notes
                  • Section 310J: inserted, on , by section 15 of the Companies Amendment Act 1999 (1999 No 19).