- Formal insolvency procedures
- Receivership appointments
- Voluntary administration
- Corporate rescue strategies
- Creditor compromises and schemes of arrangement
Business Recovery to help and support your business when it is in a financial crisis
Insolvency and Liquidation
After consulting with our professionals, you may come to the conclusion that the only option available is for the Company to be liquidated.
Although this means the end of your business, it may be advantageous to take steps to liquidate your business before it deteriorates to the point where there are insufficient assets to cover your debts to a secured creditor or to any government creditor such as the IRD or ACC , or to any creditor that may hold a personal guarantee as this would leave the guarantors with personal obligations.
In a liquidation, all of the assets of the business are turned over to the possession and control of the appointed liquidator , who is duty-bound to takes steps to preserve, protect, and evaluate the business and report on the assets and liabilities of the business in the First report to creditors.
Ultimately the companies’ assets are sold and converted into cash, accounts receivable are collected, and other assets dealt with. A dividend is paid to the proven creditors on a pro-rata basis subject to the ranking of creditors as set out in Schedule 7 of the Companies Act 1993.
A Receiver or Receiver-Manager (“Receiver”) may be appointed by a secured lender under a General Security Agreement (“GSA”) covering all of the security of the debtor.
In the most common form, a receivership that is pursuant to a GSA, the Receiver is appointed to take possession of the assets, to manage them in such a manner that provides the secured lender will be paid out, or to liquidate them for the same purpose.
The Receiver acts primarily for the secured lender, but also has a fiduciary relationship to the debtor. The Receiver must act in good faith and preserve the assets of the debtor, but is not obligated to consider the long term objectives of the debtor. If the Receiver can realize sufficient funds to pay out the secured lender in the short term, then the Receiver will most likely be there only for the short term. Once the secured lender is paid out the surplus assets are returned to the debtor to be managed by its directors.