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Chris The Lawyer
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Category: New Zealand Law
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Does a Cartered Accountant appointed as a Liquidator by the

Customer Question

Does a Cartered Accountant appointed as a Liquidator by the Defendant of a District Court application have the right to rule that the vote at a Creditors' Meeting is based on "numbers" not "value" when we were going for $280,000 (one party) and the others consisted of his Accountant, Solicitor and father totalling about $6,000?
Submitted: 1 year ago.
Category: New Zealand Law
Expert:  Chris The Lawyer replied 1 year ago.

christhelawyer : HiWelcome to JustAnswer. My first response will follow shortly. Please feel free to follow up if anything is not clear. This can depend on what is being voted on but certainly for some purposes the value will have priority
christhelawyer : If you tell me the purpose of the vote I will tell you if the liquidator is correct in this instance.
Customer:

First, in respect to confirmation of his appoinment. Second in respect to setting up of a Creditors' committee

christhelawyer : At a meeting of creditors Schedule 5 of the Act applies, and clause 5 in particular which says
christhelawyer : 5Voting(1)At any meeting of creditors or a class of creditors, not being a meeting held for the purposes of section 230, a resolution is adopted if a majority in number and value of the creditors or the class of creditors voting in person or by proxy vote or by postal vote in favour of the resolution.(2)At any meeting of creditors or a class of creditors held for the purposes of section 230, a resolution is adopted if a majority in number representing 75% in value of the creditors or class of creditors voting in person or by proxy vote or by postal vote in favour of the resolution.(3)A creditor chairing the meeting does not have a casting vote.
christhelawyer : So there must be a majority of numbers and value, and this liquidator may have got this wrong.
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 19377
Experience: 34 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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Customer: replied 1 year ago.

Thanks for the above and sorry about the typo! Chartered Accountant (of course).
!. Under what authority does a Liquidator, appointed by the Directors of the relative company,have the right to:-


(a) Refuse to report to the major creditor (by some $270,000) for the first six months and


(b) Report only the bank balance and "total claimed creditors" when that time is up and


(c) Simply decide to not report any more for another six months?


 


2. Is there any form of redress, except application to the the High Court, concerning a Liquidator appearing to NOT be acting in a reasonable manner with the major creditor in accordance with the Companies Act 1993?


3. In the case where a "Phoenix Company" has been set up replacing the whole trading operation on the company in liquidation, should the Liquidator be responsible to the Companies Office to get the offending Director disquaified from continuing as a Director or is it OK for him to be able to continue on running the Phoenix Company?


 


4.Is not a Liquidator resonsible to go back over the books of the Liquidating Company to identify if excess drawings have been taken by the Managing Director over the last five years and claw them back?

Expert:  Chris The Lawyer replied 1 year ago.
I would think there may be a conflict of interest acting as a liquidator of the old company and accountant to a phoenix company.

The reporting requirements are in section 255(2)(d) which says-

"within 20 working days of the end of each period of 6 months following the date of commencement of the liquidation, prepare and send to every known creditor and every shareholder, and send or deliver to the Registrar, a report—
(i)on the conduct of the liquidation during the preceding 6 months; and
(ii)of any further proposals which the liquidator has for completing the liquidation."

This shows the accountant in your case has not complied with the act. You can complain to the Registrar of Companies but this doesn't always achieve much as they tend to say you should apply for removal to court. But you should also report this company and its director as a phoenix company and this may get more attention,

And yes, excess drawings should be examained.

Unfortunately, replacing the liquidator is the most effective remedy however.

Customer: replied 1 year ago.


Thanks, Chris.


 


No, I am not aware that the liquidator is also the accountant of the phoenix company and am sorry if I lead you to that conclusion.


 


How can the liquidator be replaced?


If he can be replaced who pays the new liquidator?


As we have no money left in the company (to pay our solicitor) what recourse do we have to see some sort of justice done?

Expert:  Chris The Lawyer replied 1 year ago.
The remedies are all expensive and legal aid would not be available for this sort of action. The only way to replace a liquidator is at a creditors meeting-here that may be difficult because of the action of the accountant. The other way would be to apply to court, which may not be easy if you do not have the funds. But sharing this with the Registrar of Companies may be all you can otherwise do.
Customer: replied 1 year ago.

I appreciate what you have done for me and wanted to rate it OK but it seems your system is insisting on charging me another $47! I understood from your offer of 5 free questions that there would be no charge! How do I deal with this?

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