Your rights: Personal disservice

By CAITLIN WRIGHT of Chapman Tripp

Q. Four years ago, I won a personal grievance claim against my employer. The employer appealed unsuccessfully. Shortly afterwards, the company was placed into voluntary liquidation. What are my options?

A. Liquidation provides the means by which a company's assets can be realised and the proceeds of sale distributed to creditors by an independent person (the liquidator).

The remedy is commonly used by creditors in trying to recover debts owing to them by companies, however companies can also decide to put themselves voluntarily into liquidation.

Unfortunately, the fact that a company has gone into liquidation (either voluntarily or by court order) will sometimes mean that a creditor such as yourself is unlikely to recover any significant amount.

The only realistic option you have to enforce your judgment debt against the company is to lodge a claim in the liquidation.

Generally, any debts due under final court judgments will ordinarily be accepted by the liquidator.

If you have not already done so, you should contact the liquidator to find out the date by which claims must be made.

Liquidators have a range of powers, including the power to recover assets disposed of by the company during any period of insolvency, to ensure that those assets are distributed to creditors on an equitable basis.

If the company's assets are insufficient to meet all liabilities, then the liquidator must apply the assets in accordance with the priorities established by the Companies Act 1993. As an unsecured creditor, you will unfortunately rank near the bottom of the list.

Although the Act gives priority status to employees' claims for wages and salaries payable before the date of the liquidation (to a maximum of $6000 per employee), a personal grievance decision will not fall into this category unless the judgment specifically includes a component for lost wages or salary.

Liquidators are subject to a range of duties, including a duty to act in good faith and exercise reasonable care in the administration of the liquidation.

The liquidator is also required to be independent of the shareholders and trustees.

If you believe that the liquidator is failing to comply with his or her required duties, you may apply to the court for an order requiring the liquidator to comply with those duties, or remove the liquidator from office.


Employment Relations Service

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