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Companies Act 1993

Voluntary administration - Creditors' meetings generally

239AMC: Power of court where outcome of voting at creditors’ meeting determined by related creditor

You could also call this:

“Court can change voting outcome if related creditor influenced result”

If you’re at a meeting where people vote on something important for a company that’s having money troubles, there are special rules. Sometimes, someone who votes might be closely connected to the company. We call this person a ‘related creditor’.

After the meeting, if the person in charge (called the administrator) finds out that a related creditor voted, they need to check if that vote should have been ignored. If ignoring that vote would have changed the result, the administrator needs to tell everyone about it right away.

Even if the related creditor’s vote should have been ignored, the result of the vote still counts unless a court says otherwise. The court can make different decisions about what should happen next. They might say the vote doesn’t count, or that everyone needs to vote again. They could also stop certain people from voting next time.

If the administrator doesn’t tell everyone about the related creditor’s vote when they should have, they might get in trouble with the law.

Remember, these rules are there to make sure that votes about a company’s future are fair and that people closely connected to the company don’t have too much say.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS411213.

Topics:

Business > Industry rules

Business > Fair trading

Crime and justice > Courts and legal help

239AMB: Further powers where court orders creditor’s vote be taken into account, or

“Court can make decisions about creditor votes and company meetings”

239AN: Administrator must call first creditors' meeting, or

“Administrator must organise a quick meeting with people the company owes money to”

Part 15A Voluntary administration
Creditors' meetings generally

239AMCPower of court where outcome of voting at creditors’ meeting determined by related creditor

This section applies in relation to a resolution at a creditors’ meeting if,—
after the meeting, the administrator becomes aware that a creditor that voted on the resolution is a related creditor; and
the administrator is satisfied that,—
1. in accordance with section 239AM or 239AMA, the related creditor’s vote should have been disregarded; and
2. the resolution would not have been passed, defeated, or required to be decided by a casting vote (as the case may be) if the vote cast by the related creditor (or, if there is more than 1 related creditor, the votes cast by the related creditors) had been disregarded.

Despite sections 239AM(1) and 239AMA(1), the outcome of the vote on the resolution is valid and effective unless the court orders otherwise under subsection (4).
The administrator must, as soon as practicable after becoming aware that this section applies to the resolution, give notice of that fact to every known creditor.
The court may, on the application of the administrator or a creditor,—
order that the resolution be set aside or treated as having passed:
order that a new meeting be held to consider and vote on the resolution:
order that a specified related creditor or creditors must not vote on the resolution or on a resolution to vary or amend it:
make any other orders that the court thinks necessary.

An administrator who fails to comply with subsection (3) commits an offence and is liable on conviction to the penalty set out in section 373(2).

Notes

Section 239AMC: inserted, on 1 September 2020, by section 13 of the Insolvency Practitioners Regulation (Amendments) Act 2019 (2019 No 28).