Insolvency relief for businesses from the impact of COVID-19
On Friday, 3 April 2020, the Minister of Finance announced that “the Government will be introducing legislation to make changes to the Companies Act to help businesses facing insolvency due to COVID-19 to remain viable, with the aim of keeping New Zealanders in jobs.” See https://www.beehive.govt.nz/release/further-measures-support-businesses
The temporary changes include:
giving company directors facing significant liquidity problems because of COVID-19 a ‘safe harbour’ from insolvency duties under the Companies Act
enabling businesses affected by COVID-19 to place existing debts into hibernation until the businesses are able to start trading normally again
giving the Registrar of Companies the power to temporarily extend deadlines imposed on companies, incorporated societies, charitable trusts and other entities under legislation; and
giving temporary relief for entities that are unable to comply with requirements in their constitutions or rules because of COVID-19.
No timeframe was given for the introduction of the legislation. The details will be finalised in the coming weeks. However, the Minister indicated that the legislation would be backdated to 3 April 2020.
The Registrar of Companies’ website contains further details of the proposed legislation. See https://www.companiesoffice.govt.nz/news-and-notices/insolvency-relief-for-businesses-impacted-by-covid-19/