The Companies (Directors Duties) Amendment Bill
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In early May, a Select Committee issued its report on the Companies (Directors Duties) Amendment Bill, which proposes amendments to section 131 of the Companies Act 1993.
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Focus on directors’ duties: UK Supreme Court’s “momentous” decision on creditors’ interests
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BTI 2014 LLC v Sequana SA [2022] UKSC 25.
On 5 October 2022, the UK Supreme Court released its long-awaited and self-described “momentous” decision considering the fiduciary duty of directors to act in good faith in the interests of the company. Specifically, this decision is the first time that the UK Supreme Court (or the House of Lords) has confirmed that directors owe a duty to consider or act in the interests of the company’s creditors if the company becomes or is at risk of becoming insolvent. In so doing, the decision has implications for directors in New Zealand.
The end of the Feltex litigation
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Houghton v Saunders [2021] NZSC 38
A recent decision by the Supreme Court has brought an end to a long-running saga through the New Zealand courts. Commenced in 2008, a class action suit of some 3,600 shareholders has rolled on against the directors of Feltex Carpets Limited (Feltex) and its (former) private equity owner, Credit Suisse, for thirteen years.
Read MoreCourt of Appeal confirms Mainzeal directors’ liability, but refers case back to the High Court to determine extent of damages
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Yan v Mainzeal Property and Construction Ltd (in liq) [2021] NZCA 99
On 31 March 2021, the Court of Appeal delivered a 186-page judgment in the much-publicised and lengthy Mainzeal litigation.
Read MoreSolvency the key
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Supreme Court decision a warning to directors trading near-insolvent companies
Madsen-Ries v Cooper [2020] NZSC 100
Debut Homes Limited (Debut) was a property developer. Mr Cooper is Debut’s sole director. In November 2012, Mr Cooper decided to wind down Debut’s operations. Existing developments would be completed but no new developments undertaken. At the time this decision was made, it was forecast that there would be a deficit of over $300,000 in GST once the wind-down was completed. The liquidators of Debut sued Mr Cooper. They claimed that he incurred debts on behalf of Debut without a reasonable belief that Debut would be able to meet them when they fell due, in breach of ss 135 & 136 of the Companies Act 1993 (the Act),. The liquidators claimed the full amount of unsecured creditor claims, being $449,507. The High Court found that Mr Cooper had breached the above provisions. This decision was reversed in the Court of Appeal but was later reinstated by the Supreme Court.
