liquidator preferential payment clawback

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gareth41

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#261971 27-Dec-2019 00:39

Just a quick question, can a liquidator clawback preferential payments made to a supplier within the last two years, where that supplier has now shut up shop and wound up their own business?

Reason I ask, a firm I did some work for back in 2017 - contracting to them, sold them a whole lot of server equipment etc... they wen't bust in late 2018, their last payment to me was mid 2017, shortly after I started winding up my own business and got a new job working for an MSP. Was there a risk to me, or is there still a risk?

BlinkyBill

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#2381602 27-Dec-2019 08:14

Liquidator, or Official Receiver? Reason being there are different responsibilities and powers for each, and you mention ‘wound up’, so a bit unclear which is the situation.
But if it is a voluntary liquidation, i believe you are safe enough.

SATTV

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#2381607 27-Dec-2019 08:37

I think it will depend on how you wound up your business.

When I closed mine down our accountant chose not to go through a liquidator as I owned a franchise and the franchisor had purchased my franchise back.

If your accountant has gone through a liquidator you should be fine but the best person to speak to is your accountant.

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raytaylor

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#2381624 27-Dec-2019 09:27

Not an accountant, but

Step 1) If business B sold the physical hardware to A then the liquidator of A is going to have a hard time justifying getting money back from B.

Step 2) Now if B was wound up and you were not trading while insolvent at the time, then you has a director have no liability - you have done nothing wrong. Let the liquidator go after B and waste time and resources trying to resurrect the dead. This would be enough of a deterrent anyway.

So it becomes much harder for liquidator of A because if B is not trading, and the limited liability nature of B removes any responsibility of you as a director as you did nothing wrong at the time.

If B was trading while insolvent then yes you as a director could get in trouble but thats got nothing to do with the situation of A.

So by getting through all that, Then the liquidator would have to pass step 3...

Step 3) If they claw back some money from B and dont return the hardware in new perfect working order, and without compensation for depreciation then B could just go and register as a creditor and have a claim against A.
Another deterrent for the liquidator.

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dipper

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#2381637 27-Dec-2019 10:01

A liquidator can claw back any unfair preference payments made within six months of placing a company into liquidation.

In relation to a liquidation, their are two type ..a short form (section 318) and a long form ... in a short form a company is placed into a solvent liquidation with the approval of the IRD and Companies Registrar and in a long form a liquidator is appointed and they assess the assets and liabilities of the company and then distributed them based on claims (min 6 months time frame)

The main difference between the two is that under a section 318 liquidation a company can be restored to the registrar and action taken against the directors while a long form once completed it is gone ...liken it to a burial v a cremation.

Look up the companies office website and it will have on it if the company was formally liquidated or not.

gareth41

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#2382698 29-Dec-2019 23:44

I closed my own business down with the help of my accountant, didn't go through a liquidator or anything, there wasn't much to sort out anyway - I was more of a sole trader but operated under a company name etc...

ObidiahSlope

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#2382709 30-Dec-2019 04:08

Here is a link to an article on a solicitors web site which discusses a recent Supreme Court case concerning a liquidators right to claw-back payments;

https://www.grimshaw.co.nz/news-resources/tradies-win-in-supreme-court-claw-back-case/

Obsequious hypocrite

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mentalinc

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#2382717 30-Dec-2019 07:39

I recall hearing something being proposed or changed in the last month or so.

So suggest you make sure the advice is current (i.e. last one month)

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