Making a claim when a customer goes into liquidation

Once a New Zealand company is in liquidation, you can no longer chase it for what it owes you. To share in anything the liquidation pays out, you file a claim with the liquidator: a set form, the amount owed on the day the liquidation started, and the invoices behind it. Without a claim, you are not in the queue.

How to make a claim, step by step

1. Find the liquidator. Their name and contact details are on the liquidation notice in the New Zealand Gazette, and on the Companies Register.
2. Check the deadline. The liquidator can set a last day for claims and must advertise it. Claim before that day.
3. Get the claim form. Ask the liquidator for it, or find it on their website. If the Official Assignee is the liquidator, you claim online through the Insolvency and Trustee Service.
4. Fill it in. The amount owed on the day the liquidation started, against the company’s correct legal name, with full details of the debt.
5. Attach your evidence. Invoices, statements of account, and the terms and account application they signed.
6. Send it, and keep a copy. Then watch for the liquidator’s decision on your claim and their reports.

Each step is explained below.

Who do you lodge it with?

Start by finding out who the liquidator is. Every appointment is published as a notice in the New Zealand Gazette, with the liquidator’s name and how to reach them, and you can find it through this week’s list of companies in liquidation or by looking the company up on the Companies Register. Who the liquidator is decides how you claim.

A private liquidator

Most liquidations are run by a private insolvency practitioner. The claim goes to them, on the form set out in the law, which is Form 1 in the Companies Act 1993 Liquidation Regulations 1994. Liquidators usually send it out with their first report, and many have it on their websites. If you have not heard from them, ring or email the contact on the notice and ask for it.

The Official Assignee

Sometimes the court appoints the Official Assignee, the government liquidator, instead. Those claims are filed online through the Insolvency and Trustee Service, and you need a RealMe login to do it. Once your claim is in, you can follow the progress of the liquidation there.

If it is receivership rather than liquidation

A receiver is appointed by a secured creditor, usually a bank, and acts for them. The Insolvency and Trustee Service says to find the receiver on the Companies Register and contact them directly. Often the business keeps trading for a while, and you may get a letter saying they are aiming to pay you by a certain date, or in stages, and asking you not to take them to court while they trade through it. Then you have a decision to make about whether you keep working with them.

What goes in the claim?

Section 304 of the Companies Act 1993 says a claim by an unsecured creditor must be on the prescribed form, give full particulars of what you are owed, and identify the documents that back it up. The liquidator can ask to see those documents. Under section 306, the amount is worked out as at the date and time the liquidation started.

The Insolvency and Trustee Service lists invoices and statements of account among the evidence it accepts, and says the amount in your evidence should match the amount you claim. You can include interest up to the date of the liquidation where your credit agreement with the customer allows for it, but no interest or penalties after that date. Any cost of putting the claim together is yours.

Is there a deadline?

There can be. Under regulation 12 of the Liquidation Regulations, the liquidator can fix a day by which creditors must make their claims. It has to be at least 10 working days after the notice, and it has to be publicly notified, so look for it in the Gazette and in the liquidator’s correspondence. If you miss it, you are left out of any payment made before your claim goes in. You can still claim afterwards, and if your claim is admitted you share in later payments, as long as there is money left to pay out.

If you are a secured creditor

A creditor with security, such as a registered interest on the PPSR, has more options under section 305. They can realise the property the security covers, or value it and claim for the balance as an unsecured creditor, on a different form (Form 2), or give the security up and claim for the whole debt. If that is you, talk to the liquidator early about which applies.

Confirm the correct legal entity

Your claim is against the company in liquidation, so make sure it is the company you actually worked for. We have seen invoices on liquidators’ reports without a legal name on them. Look the customer up on the Companies Office website, check the name matches the one on your paperwork, and check the director is who you think it is.

Find the signed account application and terms

This is where the paperwork from the start of the relationship earns its keep. If your customer signed an account application and your terms of trade, that is what you pull out and say: here is the signature, and here are the terms they accepted. It is also where you find out whether a director signed a personal guarantee, which matters more than anything else on this page.

What happens after you lodge it?

The liquidator decides, as soon as practicable, whether to admit your claim in full, in part, or not at all, and must tell you in writing if they reject any of it (section 304). Where the Official Assignee is the liquidator, the Insolvency and Trustee Service says you can appeal a rejection to the High Court within 15 working days.

You will get the liquidator’s reports, the first one soon after they are appointed and then one every six months. We explain what the liquidator’s report tells you on its own page. The final report goes to every creditor whose claim was admitted.

The creditors’ meeting

Under section 243, the liquidator calls a meeting of creditors to decide whether to confirm them in the job or replace them. Where the shareholders or directors appointed the liquidator, it has to be held within 10 working days of the appointment, and within 30 where the court did, with public notice at least 5 working days beforehand. Under section 245 the liquidator can decide not to hold one, but must tell creditors why, and any creditor can insist on a meeting by writing to them within 10 working days.

When payments are made

Liquidations are a long-tail process. Payments are normally made at the end, and the Insolvency and Trustee Service is plain that it is common for only the preferential creditors to receive anything. What decides it is the pool that is left and where you sit in the queue.

Follow the liquidation on the Companies Office

Look the company up on the Companies Register by its correct legal name, and follow what is happening through the reports and documents filed there. Then put the director’s name into a director search, to see whether other companies of theirs are also affected. The full creditor lists are not always on the register, so here is where else to look, and how to read the report.

Is a claim worth making?

One of our clients, a refrigeration business, was owed about $700 when a customer went under. She put her claim in anyway, and when the paperwork came through she could see Inland Revenue and a large drinks company in the queue ahead of her. She knew they came first, and she popped her name down just in case. That is exactly what it is: a queue. Whether anything reaches you is crystal ball material, and for most suppliers the chances are slim.

Whether you put in a claim is a case-by-case decision. It depends on the value of the claim, and on where you and your business are at right now: how much mental bandwidth you have for it at the moment, and whether you want to follow the process through on principle. There are a variety of reasons people choose to put in a claim, or choose not to, and all of them are relative to the person, their business and what they are owed.

Once your claim is lodged, best practice is to leave it in the hands of the liquidators and let it run its course, while keeping yourself informed and up to date. Then ask yourself whether a director gave you a personal guarantee. If they did, whether the business is in receivership or liquidation, you can potentially pursue the unpaid amount through that guarantee.

What the claim shows you about next time

Putting a claim together is a close look at what you actually had in place with that customer: the legal name, the signed terms, whether there was a guarantee, how far the invoices had been allowed to run. What our refrigeration client did next is what we would say to anyone reading this. Getting prepayment where you can, and getting onto invoices faster, stops the risk from getting out as far, so the next claim, if there ever is one, is a small one.

If your customer has only just gone under, start with what happens to your money when a customer goes into liquidation.

This page describes the process in general terms, from our own research and commercial experience. Do your own research, and get legal advice for your own situation.