Exploration of Options
Struggling or insolvent business should not be managed alone. We are focused on saving New Zealand businesses from corporate death. We work with business owners and their current advisors to strategically plan for the future of businesses and restructure. In some cases, we will also recommend adding other advisors with additional expertise.
There are many ways to save or restructure businesses. Often, it is hard to identify these strategies when business owners are subjectively analyzing the business. Objectivity and expertise are crucial.
At Norling Law we have expert restructuring lawyers who offer a FREE 30-minute Legal Consultation where we can discuss the issues and we can add strategic value. After the discussion, we can decide whether we can help you and at what cost.
Hive Down of a Company
On numerous occasions we have been involved in restructures that is by way of a “hive down”.
A hive down generally involves three key steps:
Establishing a new company (or sometimes multiple companies to separate parts of the business and/or assets);
Selling the business and/or assets to that new company (or companies);
The old group using the proceeds of the sale to part-pay debt and then being struck off.
A hive down can attract new investors and provide a clean slate. It is also a perfect time to review inefficiencies and make changes.
A hive down is not always appropriate. A careful analysis is required. In many cases, companies cannot sell assets without secured creditor consent. A careful discussion will need to occur with secured creditors regarding either paying their debt or transferring securities. Further, there can be civil and criminal liability if a hive down breaches phoenix company laws (discussed below).
Phoenix companies rise from the ashes of failed companies and use similar names and have similar directors as the failed company.
A Phoenix company has a similar name as a failed company (that suggests an association).
When considering this issue, we ask the question, do people dealing with the Phoenix realise that they are dealing with a different “entity” to the one they used to deal with?
Director of a failed company cannot be:
A director of a Phoenix company;
Directly or indirectly take part in promotion, formation or management of Phoenix company; or
Directly or indirectly be concerned in or take part in the carrying on of the business of a Phoenix company.
The consequences to a director who gets this wrong could be:
Five years imprisonment;
A fine of up to $200,000;
A banishment from acting as a director of a company;
Personally liability for the debts of the Phoenix company.
There are exceptions to the rules and various strategies to avoid these consequences. We work with clients to ensure they implement the right strategies for their circumstances and avoid onerous consequences.
More Information for Business Rescue and Restructure
Our expert insolvency and restructuring lawyers assist clients to navigate this process correctly. There are many pitfalls if implemented incorrectly. We have successfully assisted clients in rescuing their businesses throughout New Zealand.
Please refer to our People for more information on who we are, our experience and how we can help you.
We have offices on the North Shore in Auckland, New Zealand or can have the consultation by phone.