COVID-19 Response (Further Management Measures) Legislation Act 2020

  • Corrections have been made to section 2(2), (3) and Schedule 2 clause 9(10) on 25 May 2020 under section 25(1)(j)(i) and (ii) of the Legislation Act 2012.

Schedule 4 Commerce and Consumer Affairs: new Schedule 13 inserted into Companies Act 1993

s 3

Schedule 13 COVID-19 business debt hibernation

s 395A

Contents

1Purposes
2Overview of schedule
3Application of schedule
4Interpretation
5Board of entity may agree to entity entering into BDH
6Entity may enter BDH by delivering notice to Registrar
7Copy of notice must be sent to creditors
8Restriction on entering into BDH more than once
9Entity must develop proposal for arrangement and send notice to creditors
10Contents of notice
11Creditors’ meeting is voluntary
12Effect of irregularity or failure
13Protection period
14When protections start to apply (and entity enters into BDH)
15Protections generally apply for 1 month and additional 6 months if creditors approve arrangement
16Protections cease to apply if conditions not complied with
17Protections cease to apply if entity fails to send new certificates on request
18Protections cease if entity subsequently becomes subject to compromise or enters voluntary administration, receivership, or liquidation
19Entity may decide to come out of BDH early
20Protections subject to approval
21Protections do not apply to general security holders
22Protections do not apply to excluded debts
23When arrangement is approved
24Approval needs majority in number and value of creditors
25Duty to receive and count votes
26Amounts must not be determined by reference to class of creditor
27Board of entity must prepare certificate of result of vote
28Board must ensure creditors and Registrar are notified of result of vote
29Arrangement is binding
30Restriction on effect of arrangement
31Variation of arrangement
32Related creditor’s vote to be disregarded unless court orders otherwise
33Creditor’s vote disregarded if entity considers creditor is related creditor
34Further powers where court orders creditor’s vote be taken into account
35Power of court where outcome of voting determined by related creditor
36Powers of court
37Court may order that creditor is not bound
38Charge unenforceable
39Owner or lessor must not recover property used by entity
40Proceeding must not be begun or continued
41Entity not liable in damages for refusing consent
42Enforcement process halted
43Duties of court officer in relation to entity’s property
44Certain guarantees may not be enforced during protection period
45If enforcement of charges begins before entity enters into BDH
46Charge over perishable property
47Court may limit powers of secured creditor, etc, in relation to property subject to charge
48Giving notice under security agreement
49If recovery of property begins before protection period
50Recovering perishable property
51Court may limit powers of receiver, etc, in relation to property used by entity
52Giving notice under agreement about property
53When provisions do not apply
54Part applies only if creditors’ meeting is held
55Methods of holding meetings
56Adjournment of meeting
57Chairperson
58Quorum
59Proxies
60Postal or electronic votes
61Proposed arrangement may not be varied at meeting
62Bodies corporate may act by representatives
63Other proceedings
64Effect of irregularity or defect
65How notices or documents must be sent to creditors
66Effect of actions under schedule
67Right for new advance of money or credit may not be enforced
68Burden of proof
69Registrar must register or publicly notify information about notices
70Schedule does not prevent subsequent compromise, voluntary administration, receivership, or liquidation
71Effect of arrangement in liquidation of entity
72Crown not prevented from voting to approve arrangement
73Schedule applies despite anything contrary in Construction Contracts Act 2002
74Arrangement treated as instalment arrangement under Tax Administration Act 1994

Part 1 Preliminary provisions

1 Purposes

(1)

A purpose of this schedule is to provide for the business, property, and affairs of an entity that is facing significant liquidity problems, or an entity that may in the future face such problems, because of the effects of the outbreak of COVID-19 to operate in a way that—

(a)

maximises the chances of the entity, or as much as possible of its business, continuing in existence; or

(b)

if it is not possible for the entity or its business to continue in existence, results in a better return for the entity’s creditors and members than would result from an immediate liquidation of the entity.

(2)

In addition, it is a purpose of this schedule to give an entity referred to in subclause (1) some temporary protections relating to its debts in order to give it an opportunity to develop, with its creditors, a longer-term approach to its liquidity problems.

(3)

However, it is not a purpose of this schedule to—

(a)

facilitate the ability of an entity that has no realistic prospect of continuing to trade or operate in the medium or long term to defer a decision to enter into liquidation to the detriment of its creditors; or

(b)

allow any debts owing by an entity to be cancelled; or

(c)

allow the rights of a creditor to be varied, in any significant way, after the end of the temporary period of protection.

2 Overview of schedule

(1)

This schedule provides for certain entities to enter into business debt hibernation (BDH).

(2)

If an entity is in BDH, certain protections apply. These protections temporarily prevent certain actions being taken by the entity’s creditors and other persons (see Part 5). In summary (and subject to Part 6),—

(a)

a mortgage or other charge over the entity’s property is unenforceable:

(b)

an owner or a lessor must not recover property used by the entity:

(c)

a proceeding in a court, a tribunal, or an arbitral tribunal must not be begun or continued against the entity:

(d)

enforcement processes against the entity are halted.

(3)

The protections do not apply in relation to a creditor with security over the whole, or substantially the whole, of the entity’s property.

(4)

The protections start when the entity delivers to the Registrar a notice that the entity is entering into BDH (see Part 2). A copy of the notice must be sent to each known creditor.

(5)

The protection initially lasts for up to 1 month. This is to give the entity and its creditors an opportunity to consider an arrangement to deal with the entity’s situation. If the arrangement is approved by a majority of the creditors in number and value, the protection may continue for a further 6 months (see Part 3).

(6)

The process for obtaining the creditors’ approval of the arrangement is set out in Part 4. That Part also sets out the effects of an approved arrangement. In particular, the permitted scope of an arrangement is narrower than a compromise under Part 14 of the Companies Act 1993 (for example, an arrangement cannot involve any cancellation of the debts of an entity).

(7)

The protections are subject to certain rights of creditors and other persons under Part 6.

(8)

While the entity is in BDH, certain voidable transaction provisions do not apply. This is intended to encourage businesses to keep transacting with the entity (see Part 7).

(9)

This clause is only a guide to the general scheme and effect of this schedule.

3 Application of schedule

(1)

This schedule applies to a company or any other kind of entity (as defined in clause 4(1)).

(2)

However, this schedule does not apply to any of the following:

(a)

a registered bank within the meaning of section 2(1) of the Reserve Bank of New Zealand Act 1989:

(b)

a licensed insurer:

(c)

an NBDT within the meaning of section 5 of the Non-bank Deposit Takers Act 2013:

(d)

an operator of a designated settlement system within the meaning of section 156M(1) of the Reserve Bank of New Zealand Act 1989:

(e)

an entity that holds a market services licence that covers the service of acting as a derivatives issuer in respect of a regulated offer of derivatives (as those terms are defined in section 6(1) of the Financial Markets Conduct Act 2013):

(f)

an entity that is in liquidation, in voluntary administration, subject to a deed of company arrangement, or subject to statutory management:

(g)

an entity if a receiver has been appointed in relation to the whole or substantially the whole of the assets and undertaking of the entity:

(h)

an entity that is subject to any other process (whether in New Zealand or another country) under which the assets and affairs of the entity are administered, or the assets of the entity are realised, for the benefit of creditors:

(i)

a qualifying counterparty within the meaning of section 122A(1) of the Reserve Bank of New Zealand Act 1989:

(j)

an entity formed or established on or after 3 April 2020:

(k)

an entity of a class prescribed by the regulations.

(3)

In addition,—

(a)

this schedule—

(i)

does not apply in the circumstances prescribed in the regulations; and

(ii)

ceases to apply if conditions prescribed in the regulations are not satisfied; and

(b)

an entity may not enter into BDH after the later of—

(i)

24 December 2020; and

(ii)

any later date prescribed by the regulations.

(4)

If an entity enters into BDH before the date that applies under subclause (3)(b), nothing in that paragraph prevents the entity from continuing as an entity in BDH after that date.

4 Interpretation

(1)

In this schedule, unless the context otherwise requires,—

arrangement

(a)

means any arrangement between an entity and its creditors (including an arrangement that relates to the governance or management of the entity); but

(b)

does not include an arrangement to the extent that it contravenes clause 30

BDH means business debt hibernation under this schedule

board means,—

(a)

in relation to a company within the meaning of this Act, the board of the company:

(b)

in relation to a partnership (other than a limited partnership), the partners:

(c)

in relation to a limited partnership, the general partners:

(d)

in relation to a body corporate or unincorporate, other than a company, partnership, or limited partnership, the committee or other governing body by whatever name called

broker has the same meaning as in section 77A(1) of the Financial Advisers Act 2008

creditor

(a)

includes—

(i)

a person who, in a liquidation, would be entitled to claim in accordance with section 303 that a debt or liability is owing to that person by the entity; and

(ii)

a secured creditor; but

(b)

does not include a person to the extent that the person is owed or must be paid an excluded debt

director means,—

(a)

in relation to a company or an overseas company, any person occupying the position of a director of the company, by whatever name called:

(b)

in relation to a partnership (other than a limited partnership), any partner:

(c)

in relation to a limited partnership, any general partner:

(d)

in relation to a body corporate or unincorporate, other than a company, partnership, or limited partnership, any person occupying a position in the body that is comparable with that of a director of a company

electronic vote has the meaning set out in subclause (2)

enforce, in relation to a charge over property of an entity in BDH, includes—

(a)

to appoint a receiver of property of the entity under a power contained in an instrument relating to the charge:

(b)

to obtain an order for the appointment of a receiver of that property for the purpose of enforcing the charge:

(c)

to enter into possession, or assume control, of that property for that purpose:

(d)

to appoint a person to enter into possession or assume control (whether as agent for the secured creditor or for the entity) for that purpose:

(e)

to exercise, as secured creditor or as a receiver or person so appointed, a right, power, or remedy existing because of the charge, whether arising under an instrument relating to the charge, under a written or unwritten law, or otherwise

enforcement process, in relation to property, means—

(a)

execution against that property; or

(b)

any other enforcement process in relation to that property that involves a court or a sheriff (within the meaning of section 239C)

enters into BDH has the meaning set out in subclause (4)

entity means any of the following:

(a)

a company:

(b)

an overseas company registered under Part 18 of this Act:

(c)

a limited partnership registered under the Limited Partnerships Act 2008:

(d)

an overseas limited partnership registered under that Act:

(e)

any other body corporate:

(f)

a partnership (within the meaning of the Partnership Law Act 2019):

(g)

an unincorporated body of persons

entity in BDH has the meaning set out in subclause (4)

excluded debt

(a)

means—

(i)

a debt that was incurred after the entity enters into BDH; or

(ii)

any salary, wages, or other amounts owed by the entity to an employee in connection with the employment relationship; or

(iii)

any amount withheld or deducted from the salary or wages of an employee as required by the Income Tax Act 2007, the Tax Administration Act 1994, the Child Support Act 1991, the KiwiSaver Act 2006, or the Student Loan Scheme Act 2011 and any such amount that should have been withheld or deducted from the salary or wages by the entity; or

(iv)

any amount payable by an entity to the Commissioner of Inland Revenue in accordance with subpart 3 of Part 3 of the KiwiSaver Act 2006; or

(v)

any other amount payable by an entity to the Commissioner of Inland Revenue that is subject to an instalment arrangement under section 177B of the Tax Administration Act 1994 that was entered into before the entity enters into BDH; or

(vi)

any other debt or claim of a kind prescribed in the regulations; but

(b)

does not include—

(i)

interest or penalties (regardless of when they fall due for payment) if the interest or penalties relate to a debt that was incurred before the entity enters into BDH; or

(ii)

any other amount that falls due for payment after the entity enters into BDH if the obligation to pay the amount is imposed under a contract or a deed that was entered into by the entity before the entity enters into BDH

general security holder has the meaning set out in clause 21

protection period has the meaning set out in clause 13

regulations means regulations made under section 395B

secured creditor, in relation to an entity, means a person entitled to a charge on or over property owned by that entity

voting date means—

(a)

the last date on which a creditor may vote on the resolution referred to in clause 9; or

(b)

if the entity decides to hold a meeting of creditors to vote on that resolution, the date of the meeting.

(2)

For the purposes of this schedule, a creditor may make an electronic vote by giving the creditor’s vote in electronic form, whether by means of an electronic communication or otherwise (for example, a vote sent by email).

(3)

In subclause (2), electronic and electronic communication have the same meanings as in section 209 of the Contract and Commercial Law Act 2017.

(4)

For the purposes of this schedule, an entity—

(a)

is an entity in BDH if the protections in Part 5 of this schedule apply to the entity; and

(b)

enters into BDH when the protections in Part 5 of this schedule start to apply to the entity (see clause 14).

(5)

Any term or expression that is defined or used in another part of this Act and used in this schedule has, in relation to an entity other than a company, the same meaning as in the other part of this Act (but applied with all necessary modifications as if it were a company).

Part 2 Board of entity may agree to enter into BDH

5 Board of entity may agree to entity entering into BDH

(1)

The board of an entity may agree to the entity entering into BDH if,—

(a)

as at 31 December 2019, the entity was able to pay its debts as they became due in the normal course of business; and

(b)

at least 80% of the directors of the entity vote in favour of a resolution for the entity to enter into BDH; and

(c)

each director who votes in favour of the resolution has signed a certificate that—

(i)

states that, as at 31 December 2019, the entity was able to pay its debts as they became due in the normal course of business; and

(ii)

includes statements about the matters set out in subclause (2); and

(iii)

sets out the grounds for the opinions referred to in that subclause; and

(d)

each of the directors who vote in favour of the resolution are acting in good faith.

(2)

For the purposes of subclause (1)(c)(ii), the director must state that, in good faith, the director is of the opinion that,—

(a)

the entity has, or in the next 6 months is likely to have, significant liquidity problems; and

(b)

the liquidity problems are, or will be, a result of the effects of COVID-19 on the entity, its debtors, or its creditors; and

(c)

it is more likely than not that the entity will be able to pay its due debts on and after the date in subclause (3).

(3)

For the purposes of subclause (2)(c), the date is—

(a)

30 September 2021; or

(b)

any later date prescribed by the regulations.

(4)

For the purposes of the opinion required by subclause (2)(c), the director may have regard to—

(a)

the likelihood of trading conditions improving:

(b)

the likelihood of a proposed arrangement being approved by its creditors under this schedule (or of the entity reaching a compromise or other arrangement with its creditors):

(c)

any other matters they consider to be relevant.

(5)

Subclause (1)(a) and (c)(i) does not apply to an entity that was formed or established on or after 1 January 2020 but before 3 April 2020.

6 Entity may enter BDH by delivering notice to Registrar

(1)

This clause provides for how an entity may enter into BDH (and receive the benefit of the protections in Part 5 of this schedule).

(2)

The entity enters into BDH by delivering to the Registrar a notice that—

(a)

states that the board of the entity has agreed to the entity entering into BDH under clause 5; and

(b)

states the legal name and the address of the entity (including the registered office of the entity (if any)); and

(c)

states the entity’s New Zealand Business Number (if any); and

(d)

states the address (which may be an electronic address) and telephone number to which inquiries may be directed during normal business hours.

7 Copy of notice must be sent to creditors

(1)

The board of the entity must send to each known creditor a copy of the notice under clause 6 as soon as is reasonably practicable after the notice is delivered to the Registrar under that clause.

(2)

The notice sent to creditors under subclause (1) must—

(a)

contain, or be accompanied by, a copy of each certificate signed under clause 5; and

(b)

contain at least a high-level description of a proposed arrangement between the entity and its creditors that is intended to address the entity’s significant liquidity problems; and

(c)

include the information specified in subclause (4)(b) and (c); and

(d)

state the address (which may be an electronic address) and telephone number to which inquiries may be directed during normal business hours; and

(e)

state the date on which the notice is delivered to the Registrar under clause 6.

(3)

The notice that is sent to a creditor must also specify the amount owing or estimated to be owing to that particular creditor.

(4)

For the purposes of this clause, the entity must compile a list of creditors known to the entity, setting out—

(a)

the amount owing or estimated to be owing to each of them; and

(b)

the total amount owing or estimated to be owing to the creditors; and

(c)

the number of creditors.

(5)

If the entity is a broker, the board of the entity must send to the FMA a copy of the notice under clause 6 as soon as is reasonably practicable after the notice is delivered to the Registrar under that clause.

(6)

If the board of an entity fails to comply with this clause, every director of the entity commits an offence and is liable on conviction to a fine not exceeding $10,000.

8 Restriction on entering into BDH more than once

(1)

If a protection period has started as a result of an entity complying with clause 6, the entity may not, at any time, deliver a subsequent notice under that clause.

(2)

Accordingly, an entity may not enter into BDH more than once.

(3)

However, this clause does not apply if—

(a)

the court orders otherwise (on an application made by the entity); or

(b)

the regulations permit a subsequent notice to be delivered.

9 Entity must develop proposal for arrangement and send notice to creditors

(1)

This clause facilitates a vote by the entity’s creditors to approve an arrangement proposed by the entity. See clause 15, which provides that the protections of BDH will cease after 1 month unless the creditors vote to approve the arrangement.

(2)

The entity must—

(a)

prepare a final proposed arrangement; and

(b)

send to each known creditor a notice that—

(i)

requests that the entity’s creditors vote on a resolution to approve the proposed arrangement (the resolution); and

(ii)

includes the matters set out in clause 10.

(3)

The notice must be sent and received not less than 5 working days before the voting date.

(4)

The voting date must be before the expiry of the 1-month period that starts on the date on which the entity enters into BDH (see clause 14).

(5)

See section 392 (which provides for when a notice is deemed to have been received).

10 Contents of notice

(1)

The notice under clause 9 must—

(a)

describe the proposed arrangement in sufficient detail to enable a creditor to form a reasoned judgment in relation to it (including the terms of the proposed arrangement and the reasons for it); and

(b)

set out the text of the resolution to be voted on; and

(c)

explain when and how a creditor may vote on the resolution, including the voting date and the manner of voting (for example, the notice may state that the creditor may email its vote to a particular email address before a particular time on a particular date); and

(d)

explain that the proposed arrangement will be binding on all creditors if approved in accordance with clause 23; and

(e)

explain that a related creditor’s vote on the resolution must be disregarded unless the court orders otherwise (see clauses 32 to 35); and

(f)

state the name of the person authorised to receive and count votes; and

(g)

contain the information required under clause 11 (if any); and

(h)

contain all other information (if any) required by the regulations.

(2)

The notice may include any other information that the entity considers is useful to its creditors.

(3)

The information about when and how a creditor may vote on the resolution must—

(a)

give the creditors a fair and reasonable opportunity to participate in the vote; and

(b)

comply with all other requirements prescribed by the regulations (if any).

(4)

Subclause (3) is subject to clauses 32 to 35 (which may prevent related creditors from voting).

11 Creditors’ meeting is voluntary

(1)

An entity is not required to hold a meeting of creditors to vote on a resolution to approve the proposed arrangement.

(2)

However, if the entity decides to hold a meeting of creditors the notice sent under clause 9 must include a statement of the following (as applicable):

(a)

the time and place of the meeting to be held under clause 55(a):

(b)

the time and method of communication for the meeting to be held under clause 55(b):

(c)

the time and address for the return of voting information for the meeting to be held under clause 55(a), (b), or (c).

(3)

If a meeting of creditors is held, it must be conducted in accordance with Part 8 of this schedule (subject to the modifications, additions, or variations specified in the regulations).

12 Effect of irregularity or failure

An irregularity in or a failure to receive a notice under clause 9 does not invalidate a vote by creditors if—

(a)

the irregularity or failure is not material; or

(b)

in the case of a meeting of creditors being held, all the creditors entitled to attend and vote at the meeting attend the meeting without protest as to the irregularity or failure; or

(c)

all the creditors entitled to vote agree to waive the irregularity or failure.

Part 3 When protection applies

13 Protection period

(1)

This Part sets out when the protections in Part 5 of this schedule apply.

(2)

In this schedule, the protection period is the period during which the protections in Part 5 of this schedule apply.

14 When protections start to apply (and entity enters into BDH)

Part 5 of this schedule starts to apply (and the entity enters into BDH) when the entity has delivered to the Registrar a notice under clause 6.

15 Protections generally apply for 1 month and additional 6 months if creditors approve arrangement

(1)

Part 5 of this schedule ceases to apply on the earlier of the following:

(a)

immediately after the expiry of the 1-month period that starts when the entity enters into BDH (see clause 14):

(b)

at the close of the voting date, if the proposed arrangement is not approved under clause 23.

(2)

However, if the arrangement is approved under clause 23, Part 5 of this schedule continues to apply until the expiry of the 6-month period that starts on the date of the approval.

(3)

This clause is subject to clauses 16 to 22.

16 Protections cease to apply if conditions not complied with

If the approval under clause 23 is given subject to the entity complying with 1 or more conditions and the entity materially fails to comply with any of those conditions, Part 5 of this schedule ceases to apply.

17 Protections cease to apply if entity fails to send new certificates on request

(1)

During the protection period, a creditor may request that—

(a)

at least 80% of the directors of the entity sign new certificates that comply with clause 5(1)(c); and

(b)

the entity sends to the creditor a copy of those certificates within 5 working days after the request is received.

(2)

The entity must comply with the request unless the entity has complied with another request under this clause from the creditor or another creditor within the previous 2-month period.

(3)

If the entity relies on subclause (2), the entity must instead, within that 5-working-day period, send to the creditor a copy of the certificates sent for the other request.

(4)

Part 5 of this schedule ceases to apply if the entity fails to comply with this clause.

18 Protections cease if entity subsequently becomes subject to compromise or enters voluntary administration, receivership, or liquidation

(1)

This clause applies if, after the entity enters into BDH,—

(a)

a compromise is approved under section 230 in relation to the entity; or

(b)

the court orders that an arrangement or a compromise be binding on the entity under section 236; or

(c)

a vote on a compromise is held at a meeting of creditors or a class of creditors in accordance with Schedule 5 but the compromise is not adopted in accordance with clause 5 of that schedule; or

(d)

voluntary administration of the entity begins under Part 15A of this Act; or

(e)

a receiver is appointed for the whole, or substantially the whole, of the property of the entity; or

(f)

the entity is put into liquidation.

(2)

Part 5 of this schedule ceases to apply, in the case of—

(a)

subclause (1)(a), when the compromise comes into effect:

(b)

subclause (1)(b), when the order comes into effect:

(c)

subclause (1)(c), at the close of the meeting:

(d)

subclause (1)(d), when the voluntary administration begins:

(e)

subclause (1)(e), when the receiver is appointed:

(f)

subclause (1)(f), when the liquidation commences.

19 Entity may decide to come out of BDH early

(1)

This clause applies if a majority of the directors of an entity that is in BDH vote in favour of a resolution for the entity to cease to be an entity in BDH before the end of the protection period that would otherwise apply.

(2)

The board of the entity may deliver to the Registrar a notice that states that the board of the entity has agreed to the entity ceasing to be an entity in BDH on a date specified in the notice (the specified date).

(3)

The specified date must be at least 5 working days after the date on which the notice is delivered to the Registrar.

(4)

Part 5 of this schedule ceases to apply on the close of the specified date.

(5)

The board of the entity must send to each known creditor a copy of the notice under subclause (2) as soon as is reasonably practicable after the notice is delivered to the Registrar.

(6)

If the board of an entity fails to comply with subclause (5), every director of the entity commits an offence and is liable on conviction to a fine not exceeding $10,000.

20 Protections subject to approval

If approval under clause 23 is given, Part 5 of this schedule applies subject to the modifications or variations specified in the arrangement that limit or reduce the protections provided by those provisions.

21 Protections do not apply to general security holders

(1)

Part 5 of this schedule does not apply in relation to a general security holder of an entity in BDH (or to the debts owing to the general security holder).

(2)

In particular, nothing in this schedule prevents any of the following persons from enforcing a charge referred to in subclause (4):

(a)

the general security holder:

(b)

a receiver or person appointed as mentioned in paragraph (a), (b), or (d) of the definition of enforce in clause 4(1) as that definition applies in relation to the charge (regardless of when the receiver or person is appointed).

(3)

Subclause (2) does not limit subclause (1).

(4)

In this schedule, general security holder, in relation to an entity, means a secured creditor that—

(a)

holds a charge on or over the whole, or substantially the whole, of the property of the entity; or

(b)

holds 2 or more charges on or over the property of the entity where the property that is subject to those charges together constitutes the whole, or substantially the whole, of the property of the entity.

22 Protections do not apply to excluded debts

Part 5 of this schedule does not apply in relation to excluded debts.

Part 4 Process for approval of arrangement and its effects

Approval of arrangement

23 When arrangement is approved

(1)

An arrangement is approved by creditors if the arrangement is adopted in accordance with clause 24.

(2)

This clause and clause 24 are subject to clauses 32 to 35 (which may prevent a related creditor from voting).

24 Approval needs majority in number and value of creditors

(1)

A resolution to approve a proposed arrangement is adopted if—

(a)

a majority in number and value of the creditors who are entitled to vote and who vote on the proposal, vote in favour of the resolution; and

(b)

all other requirements prescribed in the regulations (if any) are satisfied.

(2)

The value attributed to creditors must not include any excluded debt (and, accordingly, every amount of excluded debt must be disregarded).

25 Duty to receive and count votes

(1)

A person (A) who is authorised to receive and count votes that have been made on a resolution to approve a proposed arrangement must—

(a)

collect together all votes that have been made; and

(b)

count the number of creditors voting in favour of the resolution and determine the total amount of the debts owed by the entity to those creditors (see clause 24(2), which provides for excluded debts to be disregarded); and

(c)

count the number of creditors voting against the resolution and determine the total amount of the debts owed by the entity to those creditors (see clause 24(2), which provides for excluded debts to be disregarded); and

(d)

sign a certificate—

(i)

that certifies that A has carried out the duties set out in paragraphs (a) to (c); and

(ii)

that states whether A is relying on subclause (2); and

(iii)

if A is relying on subclause (2), that describes how A has made the assessment or estimate referred to in that subclause; and

(iv)

that states the results of the counts and determinations required by paragraphs (b) and (c); and

(e)

ensure that the certificate required by paragraph (d) is given to the entity.

(2)

If A, acting in good faith, considers there is uncertainty about—

(a)

whether a person is a creditor, A may act under this clause on the basis of a reasonable assessment of whether the person is a creditor:

(b)

whether a person is a related creditor, A may act under this clause on the basis of a reasonable assessment of whether the person is a related creditor:

(c)

the amount owing to a creditor, A may act under this clause on the basis of a reasonable estimate of the amount that is owing.

(3)

Nothing in subclause (2), clause 27 or 28, or any other provision in this schedule prevents a court from making a determination about whether a resolution to approve a proposed arrangement was, in fact, approved under clause 23.

26 Amounts must not be determined by reference to class of creditor

The person who is acting under clause 25 must not determine amounts by reference to different classes of creditor (but this does not limit clauses 32 to 35).

27 Board of entity must prepare certificate of result of vote

(1)

The board of the entity must, as soon as practicable, prepare a certificate of the result of the vote, including—

(a)

a statement of whether the arrangement was approved under clause 23; and

(b)

a statement of the terms of the arrangement (if it is approved).

(2)

The certificate is evidence of the outcome of the vote (unless the contrary is proved).

(3)

If the board of an entity fails to comply with subclause (1), every director of the entity commits an offence and is liable on conviction to a fine not exceeding $10,000.

28 Board must ensure creditors and Registrar are notified of result of vote

(1)

The board of the entity must ensure that, as soon as practicable,—

(a)

a copy of each certificate under clauses 25 and 27 is sent to each known creditor of the entity; and

(b)

there is delivered to the Registrar a notice of the outcome of the vote and a statement of whether the arrangement was approved under clause 23.

(2)

If the entity is a broker, the board of the entity must send to the FMA a copy of the notice and statement referred to in subclause (1)(b) as soon as is reasonably practicable after the notice and statement are delivered to the Registrar.

(3)

If the board of an entity fails to comply with subclause (1) or (2), every director of the entity commits an offence and is liable on conviction to a fine not exceeding $10,000.

Effect of approved arrangement

29 Arrangement is binding

(1)

An arrangement approved by the creditors of an entity in accordance with this schedule is—

(a)

binding on the entity; and

(b)

binding on all creditors to whom notice was sent under clause 9.

(2)

This clause is subject to clauses 21 and 30.

30 Restriction on effect of arrangement

(1)

The arrangement must not have the effect of—

(a)

cancelling all or part of a debt of the entity that is owing to a creditor; or

(b)

varying the rights of a creditor or the terms of that debt (other than a variation specified in subclause (2) or permitted under subclause (3)); or

(c)

preventing the exercise of any of the creditor’s powers, or restricting any of the creditor’s rights, after the end of the protection period.

(2)

For the purposes of subclause (1)(b), the arrangement may have the effect of—

(a)

reducing the amount of any payment to be made by the entity to a creditor during the protection period (without a consequential change being made to an annual interest rate):

(b)

postponing, during a protection period, the dates on which payments are to be made by the entity to a creditor (without a consequential change being made to the annual interest rate or annual interest rates):

(c)

preventing the exercise of any of the creditor’s powers, or restricting any of the creditor’s rights, to enforce payment of the due debt during the protection period.

Example

An arrangement may provide that, during the protection period, an entity will pay each of its existing creditors 40 cents for each dollar that they would otherwise be paid.

The other 60 cents in the dollar will remain owing and will need to be paid in the future (unless the creditor later agrees otherwise) because the arrangement only defers payment of an amount. It may not cancel any part of the debt.

(3)

For the purposes of subclause (1)(b), the arrangement may also—

(a)

have an effect that is incidental or consequential on an effect that is permitted under subclause (2) (whether during or after the protection period); and

(b)

have any other effect permitted under the regulations (whether during or after the protection period).

(4)

Subclauses (2) and (3) are subject to subclause (1)(a) (that is, the arrangement must not have the effect of cancelling all or part of a debt).

(5)

A provision of the arrangement that contravenes this clause is of no effect to the extent of the contravention.

(6)

Nothing in this clause limits the application of Part 5 in relation to the creditor.

Variation of arrangement

31 Variation of arrangement

(1)

An arrangement approved under clause 23 may be varied—

(a)

in accordance with any procedure for variation incorporated in the arrangement as approved; or

(b)

by the approval of a variation of the arrangement in accordance with this schedule, which, for that purpose, applies with all necessary modifications as if the proposed variation were a proposed arrangement.

(2)

A variation made as referred to in subclause (1)(a) must be notified to the Registrar and can have no effect before that happens.

(3)

The provisions of this schedule apply to any arrangement that is varied in accordance with this clause.

(4)

A variation may not purport to extend the length of the protection period.

Related creditors

32 Related creditor’s vote to be disregarded unless court orders otherwise

(1)

The entity (and the person who is acting under clause 25) must disregard a related creditor’s vote on a resolution to approve a proposed arrangement unless the court orders otherwise.

(2)

A related creditor may apply to the court for an order that its vote be taken into account.

(3)

A related creditor that intends to apply for an order must,—

(a)

before a vote is taken on the resolution, send notice in writing to the entity that the creditor—

(i)

is a related creditor; and

(ii)

intends to apply to the court for an order that its vote be taken into account; and

(b)

within 5 working days of the meeting of creditors, make an application to the court.

(4)

The court may make an order that a related creditor’s vote be taken into account only if satisfied that ordering that the applicant’s vote (or the applicants’ votes) be taken into account—

(a)

is not contrary to the interests of the creditors, or a class of creditors, as a whole; and

(b)

will not prejudice, and is not reasonably likely to prejudice, the interests of the creditors to an extent that is unreasonable having regard to—

(i)

the benefits accruing to the applicant (or the applicants), or to some or all of the related creditors, from the resolution or from the failure to pass the resolution; and

(ii)

the nature of the relationship between the applicant (or the applicants) and the entity, or between the related creditors and the entity; and

(iii)

any other relevant matter.

(5)

In this schedule,—

related creditor means a creditor who is a related person of the entity

related person means, in relation to an entity,—

(a)

a promoter; or

(b)

a relative or spouse of a promoter; or

(c)

a relative of a spouse of a promoter; or

(d)

a director, shareholder, or other member; or

(e)

a relative or spouse of a director, shareholder, or other member; or

(f)

a relative of a spouse of a director, shareholder, or other member; or

(g)

a related body corporate (within the meaning of section 12(2) of the Financial Markets Conduct Act 2013); or

(h)

another entity of which a director is also a director of the entity

relative has the same meaning as in clause 5(2) of Schedule 1 of the Financial Markets Conduct Act 2013 (applied with all necessary modifications).

33 Creditor’s vote disregarded if entity considers creditor is related creditor

(1)

If the entity (or the person who is acting under clause 25) considers that a creditor that votes on a resolution to approve a proposed arrangement is a related creditor, and the creditor has not sent a notice under clause 32, the entity or person must (unless the court orders otherwise)—

(a)

disregard the creditor’s vote; and

(b)

send a notice in writing to the creditor stating the reasons for the entity’s or person’s view.

(2)

The court may, on the application of the creditor, order that the creditor’s vote be taken into account if satisfied that the creditor is not a related creditor.

(3)

The creditor must make any application under this clause to the court within 5 working days of receiving the notice.

34 Further powers where court orders creditor’s vote be taken into account

(1)

If the court orders, under clause 32 or 33, that a creditor’s vote be taken into account, the court may also do 1 or more of the following:

(a)

order that the resolution be set aside or treated as having passed:

(b)

order that a new vote be held on the resolution:

(c)

order that the protection period is extended by a period that the court thinks fit to allow a new vote to be held on the resolution:

(d)

make any other orders that the court thinks necessary.

(2)

Despite any application under clause 32 or 33, the outcome of the vote on the resolution is valid and effective unless the court orders otherwise.

35 Power of court where outcome of voting determined by related creditor

(1)

Subclauses (2) and (3) apply in relation to a resolution to approve a proposed arrangement if,—

(a)

after the voting is completed, the board of the entity becomes aware that a creditor that voted on the resolution is a related creditor; and

(b)

the board is satisfied that,—

(i)

in accordance with clause 32 or 33, the related creditor’s vote should have been disregarded; and

(ii)

the resolution would not have been passed or defeated if the vote cast by the related creditor (or, if there is more than 1 related creditor, the votes cast by the related creditors) had been disregarded.

(2)

Despite clause 32(1) or 33(1), the outcome of the vote on the resolution is valid and effective unless the court orders otherwise under subclause (4).

(3)

The board of the entity must, as soon as practicable after becoming aware that this subclause applies to the resolution, send a notice of that fact to every known creditor.

(4)

The court may, on the application of the entity or a creditor, do 1 or more of the following:

(a)

order that the resolution be set aside or treated as having passed:

(b)

order that a new vote be held on the resolution:

(c)

order that a specified related creditor or creditors must not vote or may vote on the resolution:

(d)

order that the protection period is extended by a period that the court thinks fit to allow a new vote to be held on the resolution:

(e)

make any other orders that the court thinks necessary.

(5)

If the board of an entity fails to comply with subclause (3), every director of the entity commits an offence and is liable on conviction to a fine not exceeding $10,000.

Other powers of court

36 Powers of court

(1)

On the application of the entity, the court may—

(a)

give directions in relation to a procedural requirement imposed by this schedule, or waive or vary any such requirement, if satisfied that it would be just to do so; or

(b)

order that, during a period specified in the order, beginning not earlier than the date on which notice was sent about the proposed arrangement and ending not later than 5 working days after the date on which notice was sent of the result of the voting on it,—

(i)

proceedings in relation to a debt owing by the entity be stayed; or

(ii)

a creditor refrain from taking any other measure to enforce payment of a debt owing by the entity.

(2)

Subclause (1)(b) does not apply in relation to—

(a)

any debt that is owed by the entity to a general security holder; or

(b)

any excluded debt.

37 Court may order that creditor is not bound

(1)

The court may order that a creditor is not bound by an arrangement, or make any other order that it thinks fit, if the court is satisfied that—

(a)

insufficient notice of the matters required to be notified under clause 7 or 9 was sent to the creditor (or no notice was received by the creditor); or

(b)

clause 10(3) was materially contravened in relation to the creditor; or

(c)

there was some other material irregularity in obtaining approval of the arrangement; or

(d)

in the case of a creditor who voted against the arrangement, the arrangement is unfairly prejudicial to the creditor.

(2)

An arrangement is not unfairly prejudicial to a creditor merely because the creditor is a secured creditor (or has a preferential claim under Schedule 7) and other creditors are not secured creditors (or do not have a preferential claim).

(3)

An application under this clause—

(a)

may only be made by a creditor of the entity who was entitled to vote on the arrangement; and

(b)

must be made not later than 10 working days after the date on which notice of the result of the voting was sent to the creditor under clause 28.

Part 5 Protections for entity in BDH

38 Charge unenforceable

(1)

A person must not, during the protection period for an entity in BDH, enforce a charge over the property of the entity, except—

(a)

with the permission of the court; or

(b)

in accordance with terms of an arrangement that has been approved under clause 23.

(2)

This clause is subject to Part 6.

39 Owner or lessor must not recover property used by entity

During the protection period for an entity in BDH, the owner or lessor of property that is used or occupied by, or is in the possession of, the entity must not take possession of the property or otherwise recover it, except—

(a)

with the entity’s written consent; or

(b)

with the permission of the court; or

(c)

in accordance with terms of an arrangement that has been approved under clause 23.

40 Proceeding must not be begun or continued

(1)

During the protection period for an entity in BDH, a proceeding against the entity in connection with a debt or in relation to any of its property must not be begun or continued, except—

(a)

with the entity’s written consent; or

(b)

with the permission of the High Court and in accordance with the terms that the High Court imposes; or

(c)

in accordance with terms of an arrangement that has been approved under clause 23.

(2)

This clause does not apply to a proceeding against the entity in connection with—

(a)

a debt that is owed by the entity to a general security holder; or

(b)

an excluded debt.

(3)

In this clause, proceeding means a proceeding in the High Court or any other court, a tribunal, or an arbitral tribunal.

41 Entity not liable in damages for refusing consent

An entity is not liable in damages for a refusal to give an approval or consent for the purposes of this schedule.

42 Enforcement process halted

During the protection period for an entity in BDH, an enforcement process in relation to the entity’s property must not be begun or continued except with the permission of the court and in accordance with the terms that the court imposes.

43 Duties of court officer in relation to entity’s property

(1)

This clause applies to a sheriff or registrar or other appropriate officer of the court (a court officer) who receives written notice that an entity is in BDH under this schedule.

(2)

During the protection period for the entity, the court officer must not—

(a)

take action to sell property of the entity under an execution process; or

(b)

pay to a person (other than the entity)—

(i)

proceeds of the sale of the entity’s property (at any time) under an execution process; or

(ii)

money of the entity seized (at any time) under an execution process; or

(iii)

money paid (at any time) to avoid the seizure or sale of property of the entity under an execution process; or

(c)

take action in relation to the attachment of a debt due to the entity; or

(d)

pay to any person (other than the entity) money received because of the attachment of a debt due to the entity.

(3)

The court officer must deliver to the entity any property of the entity that is in the court officer’s possession under an execution process (whenever begun).

(4)

The court officer must pay to the entity all proceeds or money of a kind referred to in subclause (2)(b) or (d) that—

(a)

is in the court officer’s possession; or

(b)

has been paid into the court and has not since been paid out.

(5)

The costs of the execution or attachment are a first charge over property delivered under subclause (3) or proceeds or money paid under subclause (4).

(6)

In order to give effect to a charge under subclause (5) on proceeds or money the court officer may retain, on behalf of the person entitled to the charge, so much of the proceeds as the court officer thinks necessary.

(7)

The court may, if it is satisfied that it is appropriate to do so, permit the court officer to take action, or make a payment, that subclause (2) would otherwise prevent.

(8)

A person who buys property in good faith under a sale under an execution process obtains a good title to the property as against the entity, despite anything else in this schedule.

44 Certain guarantees may not be enforced during protection period

(1)

During the protection period for an entity in BDH, except with the court’s permission and in accordance with the terms that the court may impose, a guarantee of a liability of the entity must not be enforced against—

(a)

a director of the entity; or

(b)

a shareholder or other member of the entity; or

(c)

the spouse or relative of a director, a shareholder, or any other member of the entity.

(2)

In this clause,—

liability means a debt, liability, or other obligation

relative has the same meaning as in clause 5(2) of Schedule 1 of the Financial Markets Conduct Act 2013 (applied with all necessary modifications).

Part 6 Rights of secured creditor, owner, or lessor

45 If enforcement of charges begins before entity enters into BDH

(1)

This clause applies if, before the start of the protection period, a secured creditor, receiver, or other person, for the purpose of enforcing a charge over the property,—

(a)

entered into possession, or assumed control, of the property of the entity; or

(b)

entered into an agreement to sell the property; or

(c)

made arrangements for the property to be offered for sale by public auction; or

(d)

publicly invited tenders for the purchase of the property; or

(e)

exercised any other power in relation to the property.

(2)

Nothing in clause 38 prevents the secured creditor, receiver, or other person from enforcing the charge in relation to the property.

46 Charge over perishable property

(1)

This clause applies if perishable property of an entity in BDH is subject to a charge.

(2)

Nothing in clause 38 prevents the secured creditor, a receiver, or a person appointed (at any time) as mentioned in paragraph (a), (b), or (d) of the definition of enforce in clause 4(1) from enforcing the charge, so far as it is a charge over perishable property.

47 Court may limit powers of secured creditor, etc, in relation to property subject to charge

(1)

This clause—

(a)

applies if,—

(i)

for the purpose of enforcing a charge over property of an entity, the secured creditor, a receiver, or other person does an act of a kind referred to in clause 45; and

(ii)

the entity is an entity in BDH when the secured creditor, receiver, or other person does that act; but

(b)

does not apply in connection with the enforcement of a charge that is held by a general security holder.

(2)

On an application by the entity, the court may order the secured creditor, receiver, or other person not to perform specified functions or exercise specified powers, except as permitted by the order.

(3)

The court may make an order only if satisfied that what the entity proposes to do during the protection period will adequately protect the secured creditor’s interests.

(4)

An order—

(a)

may be made only, and has effect only, during the protected period; and

(b)

has effect despite clauses 45 and 46.

48 Giving notice under security agreement

Clause 38 does not prevent a person from giving a notice under the provisions of a security agreement.

49 If recovery of property begins before protection period

(1)

This clause applies if, before the protection period, a receiver or other person, for the purpose of enforcing a right of the owner or lessor of the property to take possession of the property or otherwise recover it,—

(a)

entered into possession of, or assumed control of, property used or occupied by, or in the possession of, the entity; or

(b)

exercised any other power in relation to the property.

(2)

Clause 39 does not prevent the receiver or other person from performing a function, or exercising a power, in relation to the property.

50 Recovering perishable property

Nothing in clause 39 prevents a person from taking possession of, or otherwise recovering, perishable property.

51 Court may limit powers of receiver, etc, in relation to property used by entity

(1)

This clause applies if,—

(a)

for the purpose of enforcing a right of the owner or lessor of property used or occupied by, or in the possession of, an entity to take possession of the property or otherwise recover it, a person—

(i)

enters into possession, or assumes control, of the property; or

(ii)

exercises any other power in relation to the property; and

(b)

the entity is in BDH when the person does so.

(2)

On an application by the entity, the court may order the person not to perform specified functions, or exercise specified powers, in relation to the property, except as permitted by the order.

(3)

The court may make an order only if satisfied that what the entity proposes to do during the protection period will adequately protect the interests of the owner or lessor.

(4)

An order—

(a)

may be made only, and has effect only, during the protection period; and

(b)

has effect despite clauses 49 and 50.

52 Giving notice under agreement about property

Nothing in clause 39 prevents a person from giving a notice to an entity under an agreement relating to property that is used or occupied by, or is in the possession of, the entity.

Part 7 Exemption from provisions about voidable transactions and dispositions that prejudice creditors

53 When provisions do not apply

(1)

The provisions referred to in subclause (2) do not apply to a transaction by an entity in BDH if—

(a)

the transaction is—

(i)

entered into by the entity during the protection period; or

(ii)

specifically authorised under an arrangement that has been approved under clause 23; and

(b)

the transaction is entered into by all the parties—

(i)

in good faith; and

(ii)

on arm’s-length terms.

(2)

The provisions are—

(a)

section 292 (which relates to insolvent transactions) and sections 294 to 296 to the extent that those sections relate to section 292; and

(b)

subpart 6 of Part 6 of the Property Law Act 2007 (which relates to setting aside dispositions that prejudice creditors).

(3)

A transaction between an entity and another party (P) is on arm’s-length terms if the terms—

(a)

would be reasonable in the circumstances if the parties were connected or related only by the transaction in question, each acting independently, and each acting in its own best interests; or

(b)

are less favourable to P than the terms referred to in paragraph (a).

(4)

In this clause, transaction includes a disposition within the meaning of section 345 of the Property Law Act 2007.

(5)

Section 92 of the Limited Partnerships Act 2008 applies subject to this clause.

Part 8 Procedure for meeting

54 Part applies only if creditors’ meeting is held

(1)

This Part applies only if a meeting of creditors is held for the purposes of this schedule.

(2)

However, this Part applies subject to the modifications, additions, or variations specified in the regulations.

55 Methods of holding meetings

A meeting of creditors may be held in 1 or more of the following ways:

(a)

by assembling together those creditors who are entitled to take part and who choose to attend at the place, date, and time appointed for the meeting:

(b)

by means of audio, or audio and visual, communication by which all creditors participating can simultaneously hear each other throughout the meeting:

(c)

by conducting a postal or an electronic vote in accordance with clause 60 of those creditors entitled to take part.

56 Adjournment of meeting

(1)

If the meeting of creditors agrees, the chairperson may adjourn the meeting from time to time and from place to place.

(2)

An adjourned meeting must be held in the same place unless another place is specified in the resolution for the adjournment.

(3)

An adjournment does not extend the protection period (and, in all cases, the voting date must continue to be before the expiry of the 1-month period that starts on the date on which the entity enters into BDH).

57 Chairperson

(1)

A person appointed by the directors of the entity must act as chairperson of the meeting, but if no such person is appointed or is able to act, the creditors participating must choose one of their number to act as chairperson of the meeting.

(2)

The person convening a meeting under clause 55(c) must do everything necessary that would otherwise be done by the person chairing a meeting.

(3)

The chairperson or convenor does not have a casting vote.

58 Quorum

A quorum for a meeting of creditors is present if—

(a)

3 creditors who are entitled to vote, or their proxies, are present or have cast postal or electronic votes; or

(b)

if the number of creditors entitled to vote does not exceed 3, the creditors who are entitled to vote, or their proxies, are present or have cast postal or electronic votes.

59 Proxies

(1)

A creditor may exercise the right to vote either by being present in person or by proxy.

(2)

A proxy for a creditor is entitled to attend and be heard at a meeting of creditors as if the proxy were the creditor.

(3)

A proxy must be appointed by notice in writing signed by the creditor, and the notice must state whether the appointment is for a particular meeting or a specified term not exceeding 12 months.

(4)

No proxy is effective in relation to the meeting unless a copy of the notice of appointment is delivered to the entity not less than 2 working days before the start of the meeting.

60 Postal or electronic votes

(1)

A creditor entitled to vote at a meeting of creditors held in accordance with clause 55(a), (b), or (c) may exercise the right to vote by casting a postal or an electronic vote in relation to a matter to be decided at that meeting.

(2)

A creditor may cast a postal or an electronic vote on all or any of the matters to be voted on at the meeting by sending, by post or electronic means, information that indicates their vote to a person authorised to receive and count those votes in relation to that meeting, so as to reach that person not less than 2 working days before the start of the meeting or, if the meeting is held under clause 55(c), not later than the date named for the return of the voting information.

61 Proposed arrangement may not be varied at meeting

The proposed arrangement that is voted on at a meeting must be the final proposed arrangement described in the notice sent to creditors under clause 9 (that is, the arrangement must not be varied).

62 Bodies corporate may act by representatives

A body corporate that is a creditor may appoint a representative to attend a meeting of creditors on its behalf.

63 Other proceedings

A meeting of creditors may regulate its own procedure (except as provided in this Part and in the regulations (if any)).

64 Effect of irregularity or defect

(1)

An irregularity or a defect in the proceedings at a meeting of creditors does not invalidate anything done by a meeting of creditors, unless the court orders otherwise.

(2)

The court may, on the application of a creditor of the entity, make an order under subclause (1) if it is satisfied that substantial injustice would be caused if the order were not made.

Part 9 Miscellaneous provisions

65 How notices or documents must be sent to creditors

(1)

Section 391 provides for how a notice or other document must be sent to a creditor of an entity under this schedule (regardless of whether the entity is a company).

(2)

However, section 391(1) applies for the purposes of this schedule as if it also permitted a notice or other document that must or may be sent to a creditor (C) who is a natural person to be sent by email to an electronic address if—

(a)

C has previously notified the entity that C uses that electronic address; and

(b)

the entity has no reason to believe that the address is incorrect.

66 Effect of actions under schedule

Neither an entity becoming an entity in BDH nor anything in or effected by, or done under, this schedule—

(a)

places any person in breach of, or otherwise in default under, an enactment, an instrument, a confidence, a trust, or any other rule of law or equity, or makes any person liable for a civil wrong; or

(b)

may be used as evidence that an entity is unable to pay due debts or is otherwise insolvent; or

(c)

entitles any person—

(i)

to require the payment or performance of a liability not otherwise arising for payment or performance; or

(ii)

to exercise a right not otherwise becoming exercisable; or

(d)

invalidates or discharges an instrument or any provision of an instrument; or

(e)

releases a surety from a liability.

67 Right for new advance of money or credit may not be enforced

If 1 or more rights of a person (A) cannot be enforced against an entity in BDH (B) for a period because of any provision in this schedule and B has a right under a contract, an agreement, or an arrangement against A for a new advance of money or credit, that right of B cannot be enforced during the same period.

68 Burden of proof

An entity that wishes to rely on a protection in Part 5 of this schedule in a proceeding has the burden of proving—

(a)

that clauses 5 and 6 were complied with; and

(b)

that notice of the proposed arrangement was sent under clause 9; and

(c)

all other matters that are relevant to whether the protection applies to the entity.

69 Registrar must register or publicly notify information about notices

(1)

If a notice is delivered to the Registrar under clause 6, 19, 28, or 70, the Registrar must do either or both of the following:

(a)

arrange for information relating to the notice to be registered on any register kept under this Act or any other enactment that the Registrar thinks fit (and the information may be registered regardless of whether the register is kept by the Registrar):

(b)

otherwise make that information available to the public in any way the Registrar thinks fit (for example, publishing it on an Internet site).

(2)

The power under subclause (1) includes, without limitation, the power to arrange for information to be registered in the New Zealand Business Number Register established under section 18 of the New Zealand Business Number Act 2016 (and, if the information is registered, it must be treated as being public primary business data for the purposes of that Act).

70 Schedule does not prevent subsequent compromise, voluntary administration, receivership, or liquidation

(1)

This schedule does not prevent—

(a)

an entity in BDH from becoming subject to a compromise under Part 14 of this Act; or

(b)

an entity in BDH from becoming subject to an order under section 236; or

(c)

a voluntary administration of an entity in BDH beginning under Part 15A of this Act; or

(d)

a general security holder appointing a receiver for the whole, or substantially the whole, of the property of the entity; or

(e)

the entity being put into liquidation.

(2)

See, however, clause 18 (which provides for protections to cease).

(3)

The board of the entity must, within 5 working days after an event referred to in subclause (1)(a) to (e) occurs, deliver to the Registrar a notice that advises the Registrar of that event.

(4)

If the board of an entity fails to comply with subclause (3), every director of the entity commits an offence and is liable on conviction to a fine not exceeding $10,000.

71 Effect of arrangement in liquidation of entity

(1)

If an arrangement is approved under clause 23, the court may, on an application, make any order that the court thinks fit with respect to the extent, if any, to which the arrangement will, if the entity is put into liquidation, continue in effect and be binding on the liquidator of the entity.

(2)

If an arrangement is approved under clause 23 and the entity is subsequently put into liquidation, the court may, on an application, make any order that the court thinks fit with respect to the extent, if any, to which the arrangement will continue in effect and be binding on the liquidator of the entity.

(3)

An application under—

(a)

subclause (1) may only be made by—

(i)

the entity; or

(ii)

a receiver appointed in relation to property of the entity; or

(iii)

with the leave of the court, any creditor or member of the entity:

(b)

subclause (2) may only be made by—

(i)

the liquidator; or

(ii)

a receiver appointed in relation to property of the entity; or

(iii)

with the leave of the court, any creditor or member of the entity.

72 Crown not prevented from voting to approve arrangement

(1)

This clause applies if the Crown is a creditor of an entity that has entered into BDH.

(2)

Nothing in section 65K of the Public Finance Act 1989 prevents the Crown from voting to approve an arrangement under this schedule (including an arrangement that would have the effect of deferring the payment of an amount).

73 Schedule applies despite anything contrary in Construction Contracts Act 2002

The schedule applies despite anything to the contrary in the Construction Contracts Act 2002.

74 Arrangement treated as instalment arrangement under Tax Administration Act 1994

(1)

This clause applies to the extent that an arrangement approved under clause 23 involves 1 or more payments being made to the Commissioner of Inland Revenue.

(2)

The arrangement must be treated as being an instalment arrangement under section 177B of the Tax Administration Act 1994 when the arrangement is approved under clause 23.

(3)

The instalment arrangement ceases to be in force at the end of the protection period.

(4)

The Tax Administration Act 1994 applies to the instalment arrangement—

(a)

subject to the modifications, additions, or variations specified in the regulations; and

(b)

with all other necessary modifications.