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ARTICLE · 02 AUGUST 2006

NZ Insolvency Bulletin

DLA Piper Australia
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On 4 July 2006, the High Court at Christchurch found that two directors failed to act in good faith and in the best interests of their company contrary to the Companies Act 1993.

AustraliaCorporate/Commercial Law

Contents

  • Directors of a 'phoenix company' ordered to compensate creditors
    • Official Assignee obtains share of director's home for creditors
    • Court of appeal sends warning to 'sleeping' directors
    • Working with Voluntary Administration - Administrators potential liability for legal costs

    Directors Of A ‘Phoenix Company’ Ordered To Compensate Creditors

    On 4 July 2006, the High Court at Christchurch found that two directors failed to act in good faith and in the best interests of their company contrary to the Companies Act 1993. The two directors sold the business of their old company Aeromarine Limited at an under value to a new company they created, Aeromarine Industries Limited and subsequently changed the old company name. Ultimately, the directors were ordered to pay a sufficient sum to meet the debts of unsecured creditors of the old company plus interest and costs.

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