Liquidators sought to claw back payments made to creditors before liquidation. The creditors argued that the payments should not be set aside, including by relying on statutory defences and the way the running account operated.
Selected cases
Supreme Court of New Zealand · [2015] NZSC 7
Allied Concrete Ltd v Meltzer
The Supreme Court of New Zealand considered voidable transactions and payments made before liquidation.
Supreme Court of New Zealand18 Feb 2015
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Quick read
- If a customer is in financial trouble, getting paid is not always the end of the story.
- The Supreme Court of New Zealand considered voidable transactions and payments made before liquidation.
Use this to check
- Monitor distressed accounts carefully
- Keep records of supply and payment history
- Get advice before aggressive collection from an insolvent customer
Decision snapshot
What happened
- Liquidators sought to claw back payments made to creditors before liquidation.
- The creditors argued that the payments should not be set aside, including by relying on statutory defences and the way the running account operated.
What the court had to decide
- The issue was when payments made before liquidation can be treated as voidable transactions, and how creditor defences apply.
What the court decided
- The Supreme Court clarified the approach to voidable transactions and creditor defences under the Companies Act.
- The case remains important for suppliers dealing with distressed customers.
Practical impact
Practical read
- If a customer is in financial trouble, getting paid is not always the end of the story.
- Suppliers should keep evidence of ordinary trading, value given and what they knew about the customer's solvency.
Useful next steps
- Monitor distressed accounts carefully
- Keep records of supply and payment history
- Get advice before aggressive collection from an insolvent customer
How businesses should read it
If a customer is in financial trouble, getting paid is not always the end of the story. Suppliers should keep evidence of ordinary trading, value given and what they knew about the customer's solvency.
Key takeaways
- Monitor distressed accounts carefully
- Keep records of supply and payment history
- Get advice before aggressive collection from an insolvent customer