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:

  1. 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.
  2. Administrators are personally liable for payment of goods and services that are bought, hired or leased during the administration.
  3. 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.
  4. 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.
  5. 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 Court.
  6. 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 into liquidation.

If you are affected by an administration, and have any concerns about your rights, please contact us.

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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 particular circumstances.