LIQUIDATION

Question 1

Reasons to check how much the debt is worth?

Answer 1

Unless the debt is large the creditor may not gain advantage to bankrupt the debtor.

Forced sale releases less value the creditor may have to share proceeds with other creditors.

Question 2

Section 31.3?

Answer 2

Application made by statement of claim - all applications of court liquidation are made by a statement of claim

Question 3

Section 31.5?

Answer 3

Notice of proceedings and verifying affidavit - includes important information for the defendant, including the date of hearing and court number which are endorsed on the notice by the Registrar

Question 4

Liquidation Step 2: how do we Establish that company cannot pay their debt? What do we serve to the company?

Answer 4

This is done by serving a statutory demand to the company’s registered address or relying on a court judgment

Question 5

Step 3: searching database? What to do if they have proceedings?

Answer 5

Search the high court database to see if any existing liquidation proceedings are against the debtor. If there are file an appearance in support of proceedings (step 11)

Question 6

Step 4: what to do if the debt is unpaid and there is no existing proceedings?

Answer 6

File the:
1. Statement of claim HCR 31.3 (HCR Form C1) - Statement of claim is when you’re relying on the statutory demand.

2. Notice of proceedings - HCR 31.5 includes information about the date of hearing and court number which is endorsed on the notice by the registrar HCR Form C3
3. Verify the affidavit in the high court HCR 31.5 - verified allegations in the statement of claim.
   If individual HCR Form C4
   If a company HCR Form C5

May also need AFFIDAVIT OF SERVICE OF THE STATUTORY DEMAND if the defendant argued statutory demand was served at the wrong address.

If you have served a demand you must wait 15 working days s289(2)(d) companies act 1993

Question 7

Step 7: Advertising where? When?

Answer 7

Prepare and place advertisement in the NZ Gazette and in the local newspaper which is most near to the suburb to the registered office or last registered office of the debtor.

5 working days after the service of proceedings or at least 5 working days prior to the hearing

Question 8

Step 12: what to do with the plaintiff affidavit of unpaid debts? & what is the evidence of the unpaid debts??

Answer 8

Prepare and file affidavit of unpaid debts within 2 working days before the day of hearing or prepare the solicitor’s certificate that the debt remains unpaid.

Evidence of unpaid debts
1. Affidavit evidence
2. Solicitors certificate
3. Oral evidence (rarely used)

Question 9

Why must we confirm the debt remains unpaid?

Answer 9

The threat of liquidation encouraged companies to pay
HCR 31.22

Question 10

What to do if the debt is disputed?

Answer 10

You must provide an affidavit (evidence of a substantial dispute of debt) statutory demand will then set aside. S290 companies act 1993 - to set aside a statutory demand

Question 11

Two purposes of statutory demand

Answer 11

• Formal threat to apply to debtor to put debtor company into liquidation
• And a ground for which the court can put the debtor into liquidation

Question 12

Serving statutory demand - how to??

Answer 12

Client conduct rule - cannot serve at kids school to be threatening etc

Question 13

Why must you advertise the liquidation proceedings

Answer 13

So that all interested parties can support or oppose the creditors application

Question 14

If there is no registered office where do you file the application?

Answer 14

Rule 31.4 high Court rules