The appointment of administrators to Whitcoulls in New Zealand
will have prompted trade creditors and suppliers of Whitcoulls
– and other companies – to consider their
position during an administration. Administration provides the
company with 'breathing space' during which the
company's viability can be assessed by the administrator. This
is achieved by imposing a moratorium restricting most creditors
from taking enforcement action against the company
The following practical guidelines may assist trade creditors
and suppliers during the period of an administration:
Deal only with the administrator's personnel and personnel
authorised by them. Get all post administration sales and supplies
approved in writing by such personnel. Any dealing with company
property, otherwise than with the administrator's consent or
under order of the Court, is void.
Administrators are personally liable for payment of goods and
services that are bought, hired or leased during the
Further supplies can be withheld or made conditional on the
administrator agreeing to pay existing indebtedness. Note that all
payments by the administrator, including in relation to existing
debt, cannot subsequently be set aside as a voidable transaction if
the company is ultimately liquidated.
The administration does not automatically terminate existing
contracts - whether it allows you to terminate a contract with the
company will depend on the terms of that contract.
No proceedings against the company or its property may be
commenced or continued during the administration, unless allowed by
the administrator or a Court. Likewise, security interests (such as
registered retention of title interests) over suppliers'
property in the possession of the company cannot be enforced
– again, unless allowed by the administrator or a
Notwithstanding the moratorium, any secured creditor may
enforce a charge over perishable property, and holders of security
over all or substantially all of the company's property can
take enforcement action in certain circumstances.
Within 20 working days of appointment (or longer if the Court
allows), the administrator will call a 'watershed meeting'
at which creditors vote on the future of the company, including
whether a binding arrangement (Deed of Company Arrangement) should
be put in place to restructure the company or its debts, or whether
the administration should end, or whether the company should be put
If you are affected by an administration, and have any concerns
about your rights, please contact us.
DLA Phillips Fox is one of the largest legal firms in
Australasia and a member of DLA Piper Group, an alliance of
independent legal practices. It is a separate and distinct legal
entity. For more information visit
This publication is intended as a first point of reference and
should not be relied on as a substitute for professional advice.
Specialist legal advice should always be sought in relation to any
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When determining if a DOCA is to be terminated, public interest can, and often will, outweigh any benefit to creditors.
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