40DConstraints on receiver

1. Despite anything in this Act or in any instrument providing for or governing the appointment of a receiver, a receiver of any asset of a local authority, a water organisation, or Watercare must ensure that no action of the receiver prevents the provision of those services of the local authority, the water organisation, or Watercare that are essential for the maintenance of public health and safety requirements.

2. For the purposes of this section,—

3. an action of a receiver is deemed not to prevent provision of the services specified in subsection (1) unless—
   1. that action necessarily results in that outcome; and
   2. the outcome is not more fairly attributable to the act, or omission to act, of persons outside the control of the receiver; and
4. receiver includes both a receiver and a manager and includes, if persons are appointed jointly or severally as receivers and managers or both jointly and severally as receivers or managers, each of those persons.

5. A receiver must distribute the proceeds of collection of the money and assets the receiver is entitled to collect in the following order of priority:

6. first, the receiver's remuneration, and costs incurred by the receiver and reimbursement of the costs of obtaining appointment of the receiver to any person who has incurred them:
7. second, any amounts payable in respect of claims by law to be preferred to claims under any charge over those assets:
8. third, any amounts required to be paid out of the proceeds of collection of the money and assets to enable the receiver to provide the services specified in subsection (1):
9. fourth, the amounts secured by any charges over those assets in the order of priority accorded those charges, so as to preserve the respective entitlements of the holders of those charges:
10. fifth, if the receiver was appointed on the application of an unsecured creditor or unsecured creditors, to those creditors or, as the court may direct, any amounts payable to them,—
and any residue must be paid to, or applied for the benefit of, the local authority, the water organisation, or Watercare, as it may direct.

11. A receiver appointed under section 40A or section 40B(1), in exercising any powers (including those of a manager), is not entitled to control, dispose of, or otherwise interfere with the local authority's, the water organisation’s, or Watercare’s ability to exercise or perform its rights, powers, and duties in relation to assets not charged in favour of the appointor of a receiver.

12. Subject to subsection (6), subsection (5A) applies to any land that is vested in a local authority, a water organisation, or Watercare and is—

13. a reserve under the Reserves Act 1977; or
14. land over which the local authority, the water organisation, or Watercare has no power of disposition; or
15. land in respect of which the local authority’s, the water organisation’s, or Watercare’s power of disposition is conditional.

16. The power of disposition that a receiver of that local authority, that water organisation, or Watercare has in respect of the land is limited to a power of disposition by way of lease or licence for a term or terms not exceeding in the aggregate 9 years.

17. The powers of disposition that a receiver has in respect of any land of the kind described in subsection (5)(c) comprise, in addition to the power specified in subsection (5), the same conditional power of disposition as the local authority, the water organisation, or Watercare.