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Insolvency and restructuring

Resolving complex insolvency law and restructuring issues requires innovative, commercially sound, and pragmatic legal advice. Kensington Swan’s insolvency law specialists have advised on some of the country’s highest profile insolvency cases.

Our expertise has put us at the forefront of recent developments in New Zealand insolvency and restructuring law.

We are known for being approachable, responsive, and dynamic.
 

Varied clients

We advise a wide range of clients on all types of insolvency issues, including:

  • acting for insolvency practitioners
  • acting for lenders and other creditors
  • acting for directors and business owners on liability issues
  • advising on priority disputes and PPSA issues
  • advising foreign creditors and foreign insolvency professionals on cross-border insolvency issues, and assisting them with recovery of assets in New Zealand
 

Business acumen

Kensington Swan’s insolvency team comprises specialists in all areas of business, including securities, contracts, employment, property, banking and finance, corporate law, and dispute resolution.
 

Experience where it counts

  • We acted for Hiway Stabilizers New Zealand Limited in the successful appeal to the Supreme Court of New Zealand in relation to the correct interpretation of s 296(3)(c) of the Companies Act 1993 which provides a defence for creditors against claims by liquidators to set aside insolvent transactions.
  • We acted for the Administrators and Deed Administrators of Featherston Resources Limited in the successful approval and implementation of a Deed of Company Arrangement
  • We acted for the Australian administrators of Showbiz International Pty Limited and successfully obtained recognition of a foreign insolvency proceeding pursuant to the Insolvency (Cross-Border) Act 2006.
  • We acted for the liquidators of Seastone Construction and Civil Limited and successfully opposed an application to remove the liquidators pursuant to s286 of the Companies Act 1993.
  • We acted for the receivers of Supagas Limited (in receivership and liquidation), the appointing secured creditor and the purchaser of Supagas Limited’s assets from the receivers, in relation to a priority dispute with another secured creditor under the Personal Properties Securities Act, which included consideration of the good faith provisions in s25 of the Act.
  • We acted for an overseas creditor in relation to the voluntary administration of Wynyard (NZ) Limited.
  • We are acting for David Petterson, the liquidator of Polyethylene Pipe Systems Limited, in respect of litigation that has reached the supreme court.
  • We acted for a body corporate in respect of a request for inspection of records in a liquidation:
  • We acted for the liquidators of Northern Crest, the parent company of Blue Chip Group.
  • We acted for a large number of overseas creditors in the voluntary administration of Whitcoulls/Borders.
  • We acted for BankWest in successfully opposing the creditors’ compromise put forward by property developer David Henderson.
  • We acted for a former director of Bridgecorp on the collapse of Bridgecorp, which left investors owed $460 million.
  • We acted for Terry Serepisos, prior to his bankruptcy.
  • We acted for Nigel McKenna and the Melview Group on the receivership of Kawerau Falls Station and The Westin Hotel.
 

Recent experience


Hiway Stabilizers New Zealand Limited (‘Hiway’) - Supreme Court of New Zealand Appeal

We acted for Hiway in the successful appeal to the Supreme Court of New Zealand in relation to the correct interpretation of s 296(3)(c) of the Companies Act 1993 which provides a defence for creditors against claims by liquidators to set aside insolvent transactions.  
 
The Supreme Court delivered its highly anticipated decision in February 2015, unanimously allowing the appeal and finding that ‘value’ under s 296(3) of the Companies Act (being the third limb of a creditor’s defence to recovery of an insolvent transaction) can now include value given at the time when the debt was initially incurred, or value arising from the reduction or extinguishment of a liability to the creditor incurred by the debtor company as a result of an earlier transaction.
 
The Supreme Court decision concludes a period of uncertainty for liquidators and creditors, and is particularly welcomed by creditors who regularly supply goods and services on account and who now have greater certainty that the transactions they are entering into will not be set aside. The decision also affects one-off trade creditors, who were not previously able to rely on the defence as the only ‘value’ given by these creditors is at the time of supply of goods or services.
 

Featherston Resources Limited (‘FRL’) - Voluntary Administration

We acted for the administrators and then deed administrators of FRL, the parent company of Envirofocus Limited (‘Envirofocus’) and Adveco Fertilisers Pty Limited. The group of companies mined natural minerals, specifically diatomite, for export and use in various goods, including fertilisers and soil conditioners.
 
The administrators were appointed in December 2013. FRL was placed into receivership at the same time by its secured creditor and an Australian insolvency practitioner was appointed as receiver. We advised the administrators on a range of matters, including the impact of foreign proceedings and receivership on their appointment as administrators, the proposed Deed of Company Arrangement which included either a transfer of shares or assets in FRL to an overseas investor (‘DOCA’), the application of a creditors’ trust to the administration regime (a mechanism which has been widely used in Australia but not in New Zealand), the voting procedure for the watershed meeting, the application of the Takeovers Code and Overseas Investment Act, the process for renewing mining permits through New Zealand Petroleum & Minerals (‘NZPAM’), the ability to vary the DOCA, and the administration process generally.
 
The DOCA was originally approved by creditors in February 2014.  Subsequently, a further creditors’ meeting was convened in mid-April 2014 to approve a variation to the DOCA.  The DOCA was conditional upon the approval of NZPAM and the Overseas Investment Office and became unconditional in March 2015.
 

Supagas Limited (in receivership and in liquidation) (‘Supagas’) - Receivership

We acted for the receivers of Supagas, the appointing secured creditor, and the purchaser of the assets of Supagas, to defend and resolve a claim made by another creditor which sought to recover tanks and equipment sold by the receivers. This involved the application of the priority regime under the Personal Properties Securities Act and also consideration of the good faith provisions of the Act, which had not previously been considered before the High Court.
 

Seastone Construction and Civil Limited (‘Seastone’) – Liquidation

We acted for the liquidators of Seastone and successfully opposed an application to remove the liquidators pursuant to s286 of the Companies Act 1993. We successfully argued that s286 of the Companies Act 1993 (orders to enforce liquidator’s duties) was the decisive standalone provision for removal of liquidators under the Companies Act 1993. The case was important as there had been conflicting case law for the proposition that the Court has a wider general power to remove a liquidator under s284 of the Act (Court supervision of liquidation), instead of the more limited ability to remove a liquidator under s286 of the Act.
 

Showbiz International Pty Limited ‘Showbiz’- Recognition of foreign insolvency proceeding

We acted for the Australian administrators of Showbiz International Pty Limited (‘Showbiz’), and successfully obtained recognition of a foreign insolvency proceeding pursuant to the Insolvency (Cross-Border) Act 2006 (‘Act’).
 
Showbiz operated as a ticketing agency, supplying premium tickets and packages for concerts and live events in both Australia and New Zealand. Showbiz had bank accounts in New Zealand, including a term deposit account. However, the bank required an order from the High Court before it would release the funds to the administrators. Therefore, the administrators sought to have the voluntary administration recognised in New Zealand under the Act in order that they would be able to administer the affairs and assets of Showbiz in New Zealand.
 
We have previously obtained cross-border recognition for Australian trustees and liquidators, but this was the first time we had obtained cross-border recognition for Australian voluntary administrators.
 

Northern Crest Investments Limited (the parent company of the Blue Chip Group)

Northern Crest is a New Zealand company that traded in Australia and was listed on the Australian Stock Exchange.

We advised the liquidators on obtaining recognition in Australia under the UNCITRAL Model Law, to allow them to have the same powers as Australian liquidators.

With the assistance of Australian counsel, the liquidators successfully applied to the Sydney Federal Court and were granted recognition. Following recognition, the liquidators successfully applied to the Federal Court for a search warrant of the company’s premises in order to obtain books and records of the company.

These were powers that would not otherwise have been available to them as New Zealand liquidators.
 

Bank of Western Australia (BankWest)

We acted for Bank of Western Australia in successfully opposing a creditors’ compromise put forward by property developer David Henderson. We successfully argued that the Bank had not been properly served with the proposal, and as such did not have the opportunity to vote. Had the Bank voted in opposition, the proposal would not have received the required majority to enable Mr Henderson to apply to the Court for approval.

Mr Henderson then put forward a second proposal, which was strongly opposed by BankWest, and Mr Henderson was adjudicated bankrupt.

BankWest has since been able to rely on the success in New Zealand to bankrupt Mr Henderson in Australia. This was the first time that the UNCITRAL Model Law has been used in Australia to bankrupt an individual.
 

Pacific Northstar Property Group, LLC

We acted for Pacific Northstar on the New Zealand implications of its Chapter 11 Bankruptcy in California, and provided litigation support to US lawyers on the relevant aspects of New Zealand law. This was the first time the UNCITRAL Model Law on cross-border insolvency had been applied in New Zealand.

The cross-border insolvency aspect was part of a wider dispute involving parallel litigation in the US and New Zealand.


McConnell Dowell Constructors Limited

We advised McConnell Dowell on the receivership and liquidation of Hurlstone Earthmoving. Prior to its insolvency, Hurlstone was the largest earthworks subcontractor in New Zealand and had been trading for 40 years.

We advised McConnell Dowell on the major projects it was involved in with Hurlstone at the time of its insolvency: Te Mihi Power Station, the KiwiRail network, and the construction of the Port of Avatiu in the Cook Islands. Issues under the Personal Properties Securities Act were of significance in relation to  the ongoing use of equipment and tools on those construction sites.

Related legal services

Banking and finance law
Litigation and dispute resolution
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