By Tony Johnson - 22 Mar 2018
In a recent decision, the High Court has confirmed that
liquidators can successfully apply for an increase in their hourly
rates from rates that were approved by the Court at the
commencement of the liquidation. In this instance, the original
rates were in a range between $110 to $450 (plus GST). The Court
approved future rates that could be between $140 and $550 (plus
GST).
In making its decision, the Court took
into account the consent of the IRD to the new rates. The Court
considered this consent was significant because the IRD brought far
more liquidation applications in New Zealand than anyone else.
The Court considered the increased rates were reasonable. The
increase sought was less than increasing the previous rates by
CPI.
The increased rates are another factor a creditor should take
into account before deciding to proceed with a liquidation
application. The reason for this is that under the Seventh Schedule
of the Companies Act, any recoveries within a liquidation are
applied first to the liquidators' costs, then to preferential
creditors and then to unsecured creditors. Higher levels of
liquidators' costs will impact upon the total of the "fund"
available to be distributed (if any) to unsecured creditors.
If you wish to discuss any matters relating to creditor's
remedies generally or in particular, liquidation, please contact
either Tony
Johnson, Alden
Ho or Pierce
Bedogni of this office.