Bankruptcy affects the legal status of a person and has important consequences. These include—

This section is intended only as a guide to the consequences of bankruptcy.

A debtor who is insolvent may have an alternative to bankruptcy, such as—

This section is intended only as a guide to the alternatives to bankruptcy.

This subpart describes how a person is adjudicated bankrupt.

In this subpart, the person who is adjudicated bankrupt is called the debtor.

Adjudication occurs when a debtor is adjudicated bankrupt.

A debtor is adjudicated bankrupt if either—

A court may adjudicate the debtor bankrupt if—

The court’s options in dealing with a creditor’s application are set out in sections 36 to 44.

What is an act of bankruptcy is set out in sections 17 to 28.

A debtor may be adjudicated bankrupt by filing an application for adjudication with the Assignee.

The requirements for a debtor’s application are set out in sections 45 and 46.

The procedure for filing a debtor’s application is set out in section 49.

A creditor may apply for a debtor to be adjudicated bankrupt if—

The court must not make an order of adjudication on the application of a secured creditor unless the creditor has established that the amount of the debt exceeds the value of the charge by at least $1,000.

A creditor may only withdraw an application for adjudication with the permission of the court.

A debtor must not be adjudicated bankrupt on a creditor’s application unless the debtor has committed an act of bankruptcy within the period of 3 months before the creditor files the application.

The acts of bankruptcy are set out in sections 17 to 28.

A debtor commits an act of bankruptcy if—

The form that the bankruptcy notice must take is set out in section 29.

The debtor must have been served with the bankruptcy notice in New Zealand, unless the court gave permission for the service of the notice on the debtor outside New Zealand.

The time limit referred to in subsection (1)(d) is,—

In this section, a creditor who has obtained a final judgment or a final order includes a person who is for the time being entitled to enforce a final judgment or final order.

In this section, if a court has given permission for enforcing an arbitration award that the debtor pay money to the creditor,—

In subsection (1)(d)(ii), cross claim means a counterclaim, set-off, or cross demand that—

A debtor commits an act of bankruptcy if, in New Zealand or elsewhere, the debtor disposes of all, or substantially all, of the debtor’s property to a trustee for the benefit of all or any of the debtor’s creditors.

This section is subject to section 41(3)(a).

A debtor commits an act of bankruptcy if the debtor takes any of the following steps fraudulently or with an intent to give any creditor an advantage over other creditors:

A debtor commits an act of bankruptcy if the debtor takes any of the following steps with intent to defeat or delay his or her creditors:

A debtor commits an act of bankruptcy if the debtor, with intent to defeat or delay his or her creditors, avoids them by, for example, leaving or keeping away from the debtor’s home, or by staying within that home.

A debtor commits an act of bankruptcy if the debtor notifies any of the debtor’s creditors that the debtor has suspended, or is about to suspend, payment of the debtor’s debts.

A debtor commits an act of bankruptcy if the debtor admits at a meeting of creditors that he or she is insolvent and—

In subsection (1)(a), majority means a majority by number of creditors present and the value of their combined debts.

A debtor commits an act of bankruptcy if—

In this section, execution process means—

The period of 5 working days in subsection (1)(c) is qualified if an interpleader application has been made in respect of the debtor’s property that has been taken into possession. In that case the period of 5 working days does not include the days that elapse between—

A debtor commits an act of bankruptcy if—

However, subsection (1) does not apply, and an act of bankruptcy is not committed, if the judgment or the order under which the writ of sale has been issued is satisfied within 5 working days after the writ of sale has been both delivered to the sheriff and advertised.

A debtor commits an act of bankruptcy if, under an execution process issued against the debtor or the debtor’s property, a return is made that sufficient goods and chattels of the debtor could not be found on which to levy the debt.

A debtor commits an act of bankruptcy if the debtor takes any of the following steps with intent to prejudice his or her creditors, or to give one creditor an advantage over another:

A debtor commits an act of bankruptcy if—

The bankruptcy notice must—

The bankruptcy notice may name an agent to act on behalf of the creditor in so far as the notice requires—

In this section,—

Overstatement in a bankruptcy notice of the amount owing by the debtor does not invalidate the notice, unless—

A debtor complies with a notice that overstates the amount owing by—

A creditor who applies for a debtor to be adjudicated bankrupt must not issue an execution process against the debtor in respect of the debtor’s property or person to recover a debt on which the application is based.

If the creditor has already issued the execution process, the creditor must not continue it.

However, the creditor may apply to the court for permission to issue or continue the execution process, as the case may be.

After a creditor’s application for adjudication has been filed, the debtor or any creditor may apply to the court for an order halting the issue or continuance of an execution process against the debtor in respect of the debtor’s property or person by any other creditor.

On an application under subsection (1), the court may—

This section applies if an execution process has been issued out of a court (Court 1) other than the court (Court 2) where the application for adjudication was filed.

If it is proved to Court 1 that an application for the adjudication of the debtor has been filed in Court 2, Court 1 may—

The restrictions in sections 31 to 33 on issuing or continuing an execution process do not apply if the application for adjudication is withdrawn or dismissed.

In sections 31 to 34, execution process means any of the following:

The court may, at its discretion, adjudicate the debtor bankrupt if the creditor has established the requirements set out in section 13.

The court may, at its discretion, refuse to adjudicate the debtor bankrupt if—

The court may at any time halt the creditor’s application for adjudication.

The court may halt the application on the terms and conditions (if any), and for the period, that the court thinks appropriate.

If there is more than 1 application for adjudication, and 1 application has been halted by a court order, the court may, if there is a good reason, make an order of adjudication on the application that has not been halted.

If the court makes an order of adjudication under subsection (1), the court must dismiss the application that has been halted, on the terms and conditions (if any) that the court thinks appropriate.

If a creditor’s application for adjudication relates to more than 1 debtor, the court may refuse adjudication of 1 or some of the debtors without affecting the application in relation to the remaining debtor or debtors.

This section applies if the debtor—

The debtor or the trustee or any creditor may apply for an order under this section.

On the application, the court may make any of the following orders:

This section does not limit the powers of the court under section 37.

This section applies if the creditor’s application for adjudication relies on one of the following acts of bankruptcy:

If the debtor has appealed against the judgment or order underlying the bankruptcy notice or the judgment for nonpayment of trust money, as the case may be, and the appeal is still to be decided, then the court may—

This section applies if the debtor appears in opposition to a creditor’s application and the debtor says either—

The court may, instead of refusing the application, halt the application so that the question of whether the debt is owed, or how much of the debt is owed, can be resolved at a trial.

As a condition of halting the application, the court may require the debtor to give security to the creditor for any debt that may be established as owing by the debtor to the creditor, and for the costs of establishing the debt.

The court may substitute another creditor (Creditor 2) for the creditor making the application for adjudication (Creditor 1), if—

In that case, Creditor 2 must file another application for adjudication, but can rely on the act of bankruptcy to which Creditor 1’s application related.

A debtor may file an application with the Assignee to have himself or herself adjudicated bankrupt if the debtor has combined debts of $1,000 or more.

A debtor may not file an application for adjudication unless the debtor has first filed with the Assignee a statement of the debtor’s affairs in the prescribed form.

The Assignee may reject a statement of affairs that in the Assignee’s opinion is incorrect or incomplete.

A debtor who files an application with the Assignee to have himself or herself adjudicated bankrupt is automatically adjudicated bankrupt when the application is filed.

That adjudication has the same consequences as if the debtor had been adjudicated bankrupt by the court.

Two or more debtors who are partners in a business partnership may file a joint application.

The debtors are automatically adjudicated bankrupt both separately and jointly when the application is filed.

To file an application for adjudication, a debtor must—

The debtor files the application when it is endorsed by the Assignee as having been received.

After a creditor’s application for adjudication has been filed, a creditor of the debtor may apply to the court for an order appointing the Assignee as receiver and manager of all or part of the debtor’s property.

The court may make the order at any time before it makes an order of adjudication.

As part of the order, the court may authorise the Assignee to take all or any of the following steps:

An order for the Assignee’s control of the debtor’s business must be confined to what is necessary, in the court’s opinion, for conserving the debtor’s property.

After the appointment of the Assignee as receiver and manager, the court may, on an application by a creditor or the Assignee, make additional orders under section 50.

The appointment of the Assignee as receiver and manager of the debtor’s property must be advertised in accordance with regulations made under this Act for that purpose.

A creditor of the debtor must not issue an execution process of the kind referred to in section 35 after the appointment of the Assignee as receiver and manager has been advertised.

A creditor must not continue an execution process already issued before the advertisement.

However, a creditor or any other person interested may apply to the court for an order allowing the issue or continuation of an execution process, and the court may make an order on the terms and conditions that it thinks appropriate.

If the execution process is halted under section 53, then sections 77, 108 to 112, and 115 apply as if the order halting the execution process were an adjudication.

The bankruptcy commences on the date and at the time when the debtor is adjudicated bankrupt.

In this Act, date of adjudication means,—

If the debtor is adjudicated bankrupt on a creditor’s application, the court must record the date and time when the order was made.

If the debtor is adjudicated bankrupt on the debtor’s application, the Assignee must record on the application the date and time when the debtor filed the application.

The Registrar must notify the Official Assignee as soon as possible after the court makes an order of adjudication.

The Official Assignee must nominate an Assignee to be the Assignee of the debtor’s property, and may at any time direct that another Assignee is the Assignee of the debtor’s property.

This section applies if there is doubt whether an act was done, or a transaction entered into or effected, before or after the date of adjudication.

The presumption is that the act was done, or the transaction entered into or effected, after the date of adjudication, but the presumption does not apply if the contrary is proved.

Unless an adjudication is appealed under this Act,—

The Assignee must maintain a public register of discharged and undischarged bankrupts.

The register must be maintained in accordance with subpart 5 of Part 7.

In this Act, a debtor who has been adjudicated bankrupt is called the bankrupt.

On adjudication—

This section is a guide only to the immediate consequences of adjudication.

The Assignee must advertise the adjudication of the bankrupt as soon as practicable after it has occurred.

The Assignee must advertise the adjudication in the prescribed manner.

Subsection (1) is subject to section 66.

The court may order that the Assignee must not advertise the adjudication if the bankrupt has appealed against an order of adjudication or if the bankrupt has applied for an annulment of the adjudication.

After adjudication, the bankrupt must file with the Assignee a statement of the bankrupt’s affairs in the prescribed form, unless the bankrupt has already filed a statement under section 46.

As soon as practicable after adjudication, the Assignee must send the bankrupt a notice in the prescribed form stating—

The Assignee must send the notice to the address of the bankrupt given in the application for adjudication or the bankrupt’s last known address.

This section does not apply if the bankrupt has already filed a statement under section 46.

The bankrupt must file a statement of the bankrupt’s affairs in the prescribed form with the Assignee within 10 working days after receiving the Assignee’s notice under section 68(1) that the statement must be filed.

At any time after filing a statement of affairs with the Assignee under section 46 or 67, the bankrupt may file additional or amended statements or answers.

After adjudication, the Assignee must call the first meeting of the bankrupt’s creditors, unless the Assignee dispenses with the meeting under section 73.

The Assignee may call the meeting by giving notice of the time and place of the meeting to—

The Assignee must advertise the time and place of the meeting in the prescribed manner.

The first creditors’ meeting must be held—

However, the Assignee may delay calling the first creditors’ meeting if the Assignee considers that there are special circumstances that justify the delay.

The Assignee need not call a first creditors’ meeting if the Assignee—

In deciding whether the meeting should not be called, the Assignee must consider—

The Assignee’s notice to creditors under section 73(1)(b) must—

The Assignee must send the following documents with the notice of the first creditors’ meeting:

However, subsection (1) does not apply if the Assignee has not received the bankrupt’s statement of affairs when the notice is sent.

A failure in sending or receiving the documents in subsection (1) does not affect the validity of the proceedings at the meeting.

On adjudication, all proceedings to recover any debt provable in the bankruptcy are halted.

However, on the application by any creditor or other person interested in the bankruptcy, the court may allow proceedings that had already begun before the date of adjudication to continue on the terms and conditions that the court thinks appropriate.

A creditor must not begin or continue an execution, attachment, or other process in respect of the bankrupt’s property or person, for the recovery of a debt provable in the bankruptcy, after—

After advertisement of the adjudication or notice by the Assignee to the creditor, a creditor must not seize or sell any property by way of distress for rent due and owing by the bankrupt, but the creditor may continue with the distress procedure if already begun.

If the bankrupt dies after adjudication, the bankruptcy continues in all respects as if the bankrupt were alive.

The role of the creditors in the bankruptcy is primarily to—

There are 2 types of creditors’ meetings:

The rules for calling the first creditors’ meeting are set out in sections 71 to 75.

The Assignee may call subsequent meetings of creditors.

The Assignee must call a subsequent meeting if required to do so by one-quarter in number and value of the creditors who have proved their debts.

The Assignee must call the meeting by taking the steps set out in section 71(2) and (3).

A creditors’ meeting, and the resolutions passed at the meeting, are valid even if some creditors did not receive the notice of the meeting, unless a court orders otherwise.

The chairperson of a creditors’ meeting is the Assignee or a person appointed by the Assignee to be the chairperson.

However, if neither the Assignee nor the person (if any) appointed by the Assignee to be the chairperson attends the meeting, the creditor or creditors may elect one of themselves to act as chairperson for the purpose of the meeting, but only if that person is entitled to vote at the meeting.

A person appointed by the Assignee or elected by the creditors to act as chairperson may administer any oath that the Assignee could have administered if the Assignee had attended the meeting.

The Assignee or the chairperson of a meeting may adjourn the meeting from time to time and place to place.

If the Assignee attends a creditors’ meeting or an adjournment of the meeting, the Assignee—

A person may attend a creditors’ meeting—

A creditor may also attend by voting by postal or electronic vote under section 93 or by proxy on any resolution to be put to the meeting.

The bankrupt must, if required by the Assignee, attend all creditors’ meetings by being physically present or present by an audio or audio-visual link.

The Assignee, the chairperson of a creditors’ meeting, a creditor, or a representative of a creditor may question the bankrupt as to his or her property, conduct, or dealings. The chairperson of the meeting must allow only questions that relate to the bankrupt’s property, conduct, or dealings.

The questioning may be on oath.

The bankrupt must sign a statement of the bankrupt’s evidence given under the questioning, if required to do so by the Assignee or the chairperson of the meeting.

A person who is not a creditor of the bankrupt may attend a creditors’ meeting with the consent of—

The Assignee must ensure that minutes are kept of every creditors’ meeting.

The Assignee or the chairperson must sign the minutes.

The Assignee may record the meeting, but only with the consent of each person attending the meeting.

For a valid creditors’ meeting, at least the following persons must attend:

The meeting lapses if those persons do not attend, and the Assignee may call another meeting.

At a creditors’ meeting, any of the following persons may represent a creditor and, if the bankrupt attends, any of the following persons except the person in paragraph (d) may represent the bankrupt:

In addition to the persons listed in subsection (1), a creditor may be represented,—

For a creditors’ meeting to pass—

For the purposes only of determining whether the requisite majority by value has voted in favour of a resolution,—

A creditor who is entitled to vote at a creditors’ meeting may vote on a resolution to be put to the meeting—

A postal or electronic vote must reach the Assignee at least 2 working days before the meeting begins if it is to be counted at the meeting.

A voting paper for each resolution to be put to a creditors’ meeting must accompany the notice of the meeting, together with instructions for returning the voting paper or electronic vote (if allowed by the voting paper under section 93(1)(b)) to the Assignee at least 2 working days before the meeting begins.

Creditors of the bankrupt who are entitled to vote, or their representatives, may vote at a creditors’ meeting, but this rule is qualified by the provisions of sections 95 to 97.

A debt that is secured does not entitle the creditor to vote unless the creditor has taken one of the following steps under this Act:

A debt on, or secured by, a current bill of exchange or promissory note does not entitle the creditor to vote unless the creditor is willing to take the following steps:

In this section, qualifying liability means the liability to the creditor on the bill or note of every person who—

A person (A) must not vote in favour of a resolution that would directly or indirectly enable any of the persons listed in subsection (2) to receive any remuneration out of the bankrupt’s estate other than as a creditor sharing rateably with the other creditors.

The persons referred to in subsection (1) are—

The adjudication of a partner in a firm who is indebted to a creditor jointly with 1 or more of his or her partners entitles the creditor to prove the debt for the purpose of voting at any creditors’ meeting, and to vote.

A creditors’ meeting may pass an ordinary resolution—

A creditors’ meeting may pass an ordinary resolution appointing a committee of any persons to assist the Assignee in the administration of the bankrupt’s estate, but in that case the court must approve any remuneration of the members of the committee out of the estate.

A creditor, or a lawyer or accountant acting for that creditor, who has lodged a creditor’s claim form may at any reasonable time inspect and take extracts or copies of—

On adjudication,—

This section is subject to section 104.

Between the commencement of bankruptcy and discharge of the bankrupt,—

This section is subject to section 104 and section 123.

This section does not apply to property that is vested in the bankrupt under an order made under section 119(3).

If the Assignee is replaced, the property and powers vested in the former Assignee under section 101 or 102 vest in the replacement Assignee.

Property held by the bankrupt in trust for another person does not vest in the Assignee.

Nothing in the Land Transfer Act 2017 restricts the operation of sections 101 to 104.

Sections 101 to 104 do not affect the operation of any other law that prevents any property from vesting in the Assignee.

The court may, on the application of the Assignee, order that any money due to the bankrupt, or any money to become due or payable to the bankrupt, is assigned or charged to, or in favour of, the Assignee.

The assignment or charge is a discharge to the person who pays the Assignee.

The Assignee must apply the following payments in accordance with section 274:

This section applies to a creditor who has, before adjudication,—

The creditor may retain the benefit of the execution or attachment (including the proceeds) only if the creditor completed the execution or attachment—

The creditor may retain as against the Assignee a payment made by the bankrupt in the course of the execution or attachment to avoid the execution or attachment as if—

The right of a creditor under this section to retain the benefit of an execution or attachment is subject to sections 194 to 197.

This section applies if the sheriff has taken the property of a debtor in execution and is served with notice of the debtor’s adjudication before the property is sold or before the execution is completed by the receipt or recovery of the full amount of the levy of execution.

If the Assignee requires it, the sheriff must deliver to the Assignee any goods and money seized or received in part satisfaction of the execution.

The costs of the execution are a first charge on the goods or money delivered to the Assignee, and the Assignee may sell the goods or part of the goods to satisfy the charge.

This section applies if, under execution of a judgment for a sum of more than $100, the sheriff sells property of the debtor or is paid money in order to avoid a sale.

The sheriff must deduct the costs of the execution from the proceeds of sale or the money paid and retain the balance for 10 working days (which in this section is called the 10-day period), to be applied in accordance with subsection (3) or subsection (4).

If the sheriff is served with notice within the 10-day period that the debtor has filed an application for adjudication, the sheriff must pay the balance to the Assignee, who is entitled to retain it as against the execution creditor.

If the sheriff is served with notice within the 10-day period that a creditor has filed an application for the adjudication of the debtor, subject to subsection (3),—

If the sheriff is not served with notice within the 10-day period that an application for the adjudication of the debtor has been filed, the sheriff must pay the balance to the execution creditor, who is entitled to retain it as against the Assignee.

A purchaser in good faith of a debtor’s property, on which execution has been levied and which is sold by the sheriff, acquires a good title to the property as against the Assignee.

The court may set aside the rights conferred on the Assignee under sections 109 and 110 in favour of the execution creditor, to the extent and on the terms and conditions (if any) that the court thinks appropriate.

This section applies to a transaction between a person (A) and the bankrupt in relation to property that the bankrupt has acquired, or that has passed to the bankrupt, after adjudication.

The transaction is valid as against the Assignee if—

If A is the bankrupt’s bank, a transaction by A dealing with the bankrupt for value includes—

A payment of money or delivery of property by a legal personal representative to, or by the direction of, the bankrupt is a transaction for value.

This section applies to property that the bankrupt has acquired, or that has passed to the bankrupt, after adjudication.

An execution or attachment against the property is valid as against the Assignee if it is—

For the purposes of section 108 or 114—

This section applies to the Assignee’s interest in property that is acquired by or passes to the bankrupt after adjudication.

The Assignee’s interest in property to which this section applies ends and passes in the manner and to the extent necessary to give effect to a transaction, execution, or attachment to which section 113 or 114 applies.

Subject to section 120, the Assignee may disclaim onerous property.

Subsection (1) applies even if the Assignee has taken possession of the property, tried to sell it, or otherwise exercised rights of ownership in relation to it.

The Assignee must, within 10 working days after the disclaimer, send a written notice of the disclaimer to every person whose rights are, to the Assignee’s knowledge, affected by it.

For the purposes of this section and section 120, onerous property—

A disclaimer by the Assignee—

A person suffering loss or damage as a result of disclaimer by the Assignee may—