Government measures in key jurisdictions 3rd edition final - Flipbook - Page 88
New Zealand
Insolvency
The Government has made two key legislative changes to the Companies Act to prevent solvent
businesses facing temporary financial distress from being prematurely placed into liquidation.
Has the government
The first is the
, which provides businesses with an option to
made any changes
place existing debts on hold until they can start trading normally again, subject to creditor agreement.
to insolvency
This prevents creditors from taking legal action against the company to recover their debt for a period
legislation?
of six months.
The second change is the
, which provides directors with security against a legal
claim for failing to meet their insolvency duties under the Companies Act as a direct result of the impact
of the COVID-19 pandemic. Under the safe harbour regime, if a director is accused of:
•
•
reckless trading, either by agreeing to the business of the company being carried on in any manner,
or causing or allowing the business of the company to be carried on in any manner, which is likely to
create a substantial risk of serious loss to the company's creditors; or
incurring an obligation while being of the opinion that the company has, or in the next six months is
likely to have, significant liquidity problems;
she or he will be able to invoke the safe harbour by showing that she or he is of the opinion that:
•
•
any significant liquidity problems over the next six months are, or will be, a result of the effects of
COVID-19 on the company, its debtors, or its creditors; and
it is more likely than not that the company will be able to pay its due debts on and after 30
September 2021.
Details of these changes are available here.
Contractual
Issues
What measures
have been taken
to reinforce
contracts?
There has been no Government intervention in contract law, and the usual rules apply. However there
has been an increased focus on contractual small print, including:
•
questioning whether the COVID-19 Alert Level Four lockdown period was excluded from working
day provisions in a contract (not for most contracts, but for those that determine a working day to
be a day that a bank is open for business this was less clear-cut); and
•
force majeure clauses, which will suspend the performance of the contract during the force
majeure event.
Details of how a
can affect the performance of a construction contract is
available here.
In addition, the Commerce Commission (New Zealand’s competition regulator) have recognised the greater
need for commercial cooperation during the COVID-19 pandemic.
The Commerce Commission is allowing more flexibility to enable businesses to work together, potentially share
resources or otherwise cooperate to ensure consistency of supply of both products and services required by
New Zealanders.
Detail of the permitted commercial cooperation is available here.
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Government measures in key jurisdictions