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Deposit Takers Act 2023

Crisis management and resolution - No creditor or shareholder worse off - How valuer must determine compensation

374: Liquidation value

You could also call this:

"What something is worth if it has to be sold quickly to pay debts"

Illustration for Deposit Takers Act 2023

When a valuer works out the liquidation value, they must think about a few things. You need to imagine that the Bank and the Crown are not helping with any money problems during the liquidation. The valuer also needs to work out what the liquidation value would be if it happened at an earlier time, when the affected entity first got into trouble. This rule does not change what is said in section 371. The valuer has to follow these rules when they are assessing the liquidation value.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS550686.

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Money and consumer rights > Banking and loansBusiness > Industry rules
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373: Valuer must determine compensation by reference to difference between liquidation value and resolution value, or

"Valuer works out fair compensation by comparing what you got to what you would have got if the company was closed down."

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375: Resolution value, or

"Working out a company's value at an earlier time"

Part 7Crisis management and resolution
No creditor or shareholder worse off: How valuer must determine compensation

374Liquidation value

  1. The following apply to a valuer’s assessment of the liquidation value:

  2. the valuer must assume that the Bank and the Crown do not, directly or indirectly, provide any financial support or assistance in connection with the liquidation:
    1. the valuer must discount the liquidation value back to the time that the affected entity entered into resolution.

      1. This section does not limit section 371.