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Increase in approved charge out rates for liquidators

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.


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