In New Zealand, the vast majority of receivers appointed to debtor companies are appointed by a creditor of the company pursuant to a contractual power contained in a security agreement.

A Creditor has no power to appoint a receiver in absence of a contractual right to do so. A contractual term giving the power to appoint a receiver is most commonly found in security agreements that cover most or all of the debtor’s assets. It is also possible to include a term giving the power to appoint a receiver in a security agreement that covers only specific assets or a limited class of assets.

The alternative method of appointing a receiver is to gain a Court Order. In the case of Rea v Chix Products (California) Limited, the Court considered that it had an inherent power to appoint a receiver only in 2 incidences:

  1.  To preserve property that was at risk: or
  2. To facilitate the enforcement of a judgement where there are no other available means of enforcement.

These types of appointments are normally made under the Judicature Act 1908, s 16.

In addition the High Court has the power to appoint receivers under various legislative provisions that provide for the appointment of receivers. These include:

  1.  Section 174 (2) (e) of the Companies Act 1993.
  2. Section 26 (2) of the Partnership Act 1908.
  3. Section 49 of the Securities Act 1978.

The most common Court appointments of receivers these days are at the behest of the financial markets authority.

For further information please contact Tom Rodewald on 021 2277408