Hi Chris, I have spent some time talking to the Insolvencies…

Question

Hi Chris, I have spent some time talking to the Insolvencies service in NZ. They
are telling me the following things:

1. She can't file for NAP until her business is officially insolvent. I have no
idea how to do this?

2. She can't file for NAP because the car she owns is expensive - $30K-ish. This
is the car she owes money to her parents for. She will have to file for
bankruptcy.

3. Whether she files for NAP or Bankruptcy, they are questioning the validity of
the security loaded onto the PPSR and saying it is probably not valid, and the
car would immediately be sold and the money distributed to creditors in the
order they see fit.

Is what they are telling me correct, because it seems to contradict what you had
told me?

Chris The Lawyer · Accepted Answer

christhelawyer :

Hi and welcome back

Customer:

Hi :)

christhelawyer :

Is the business a company? This would have to be placed into liquidation, but if
not then personal insolvency is the answer.

christhelawyer :

But the car-they are correct that they could argue that the car security was
registered when you were insolvent. I think i said that-

christhelawyer :
"christhelawyer :

Your parents can file a security for their loan against the car, which means
that you can tell the OA that you own the car but the loan is the same as the
value of the car. This should protect it. If you sell it and return the money to
your parents you would be without a car and you would have to deal with this
problem. i do not suggest transferring this because the OA will set aside this
tarnsfer-they have the power to do so."

christhelawyer :

That would protect the car from creditors but your parents would need to show
this was a genuine loan.

christhelawyer :

I expect they could do this

Customer:

Company is a NZ Limited Company

Customer:

http://www.business.govt.nz/companies/app/ui/pages/companies/2479867
[http://www.business.govt.nz/companies/app/ui/pages/companies/2479867]

christhelawyer :

Have your creditors actually said they will now be suing you? Have you stopped
trading?

Customer:

Yeah you did say parents file a security against the car, which I did (they
don't speak English) but the OA is saying they will sell the car, and they
wouldn't recognize the security as valid perhaps. And then after selling the car
they would pay other creditors first...

Customer:

Yes the creditors have sent us a court summons... and yes, the store is closed.
Trading has stopped.

christhelawyer :

How much is the car worth now?

christhelawyer :

The Official Assignee do not always seize cars if they are needed for the
family, but if it is worth a reasonable amount they would

christhelawyer :

Is the court summons against the company?

Customer:

It's hard to say but it is a late model lexus. Probably $20k - $30k.. the court
summons is against both me and company.

christhelawyer :

You may want to write to the creditor and tell them you are looking at
insolvency, and that it is a waste of time chasing you. As for the car, your
parents may have to argue that the security was genuine and that they expected
you to repay the loan. However the Official Assignee may argue that this loan
was given when you were insolvent. This would be difficult if they do not speak
english and they would need to instruct a lawyer to help them

Customer:

It sounds like insolvency will not be NAP though. It would need to be bankruptcy
yes?

christhelawyer :

That appears correct. You could bluff the creditors and not take any steps,
except have the company liquidated. They may not want to spend money on chasing
you personally.

Customer:

How do we liquidate the company?

christhelawyer :

Could you pay a fee to a liquidator to do this? If it is a small company with no
assets left and only a few creditors this would be around $2000

christhelawyer :

Otherwise just do nothing and a creditor may do this by a ceritors application.

Customer:

this isnt something you can just apply for and have happen?

christhelawyer :

No-a liquidation happens either by a court order on a creditors application (at
no cost to you), or on a shareholders resolution to put the company in
liquidation by appointing a private liquidator (who would require payment).

Customer:

Chris one of your ideas was to pay $3k to them, and write to the court asking
them to move this to the disputes tribunal. Is this still an option with the
suit including the business as well as me personally?

christhelawyer :

Yes-that could be done even where they have filed the court case, to ensure this
is under $15,000, which is the limit of the Tribunal

Customer:

I thought they would only hear cases for individuals, not business?

christhelawyer :

Businesses can bring claims too

Customer:

Ok cool... one final question - at disputes tribunal, can my boyfriend do most
of the talking or will I have to speak there? My english is not good, and I am
nervous speaking...

christhelawyer :

Yes-as long as he is not a lawyer!

Customer:

No he is not :)

Customer:

thanks for your advice once again... this is a horrible situation :(

christhelawyer :

Lawyers cannot appear there you see

Hi Chris, I have spent some time talking to the Insolvencies…

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