Re ACS (NZ) Ltd - [2012] NZHC 1396

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-002217 [2012] NZHC 1396

IN THE MATTER OF a scheme of arrangement under Part 15 of the Companies Act 1993

BETWEEN ACS (NZ) LIMITED Applicant

Hearing: 19 June 2012

Appearances: M D Arthur and J A McMillan for Applicant
S Barker for Reserve Bank
S Hunter for Roman Catholic Bishop
R Lange for Arts Centre, Christchurch
M Corlett for Ansvar Clients Committee
J Ormsby and J Day for Church Property Trustees of the Anglican
Diocese of Christchurch
S Neville for Thornton Tomasetti

Judgment: 19 June 2012

ORAL JUDGMENT OF VENNING J

Solicitors: Chapman Tripp, Auckland michael.arthur@chapmantripp.com james.mcmillan@chapmantripp.com
Buddle Findlay, Wellington scott.barker@buddlefindlay.com
Wynn Williams, Christchurch jared.ormsby@wynnwilliams.co.nz richard.johnstone@wynnwilliams.co.nz
Gilbert Walker, Auckland stephen.hunter@gilbertwalker.com
Simpson Grierson, Auckland richard.lange@simpsongrierson.com
Duncan Cotterill, Christchurch j.forsey@duncancotterill.com
GCA Lawyers, Christchurch grant@gcalawyers.com
Cavell Leitch Pringle & Boyle, Christchurch michael.dickie@cavell.co.nz
Ellis Gould, Auckland sneville@ellisgould.co.nz

Copy to: B Stewart QC, Auckland rbstewart@xtra.co.nz
M A Corlett, Auckland mcorlett@shortlandchambers.co.nz
R G Mundy, Christchurch

ACS (NZ) LIMITED HC AK CIV-2012-404-002217 [19 June 2012]

[1] ACS (NZ) Limited (ACS) seeks orders approving a scheme of arrangement under Part 15 of the Companies Act 1993. The scheme of arrangement is intended to effect the managed withdrawal by ACS from its insurance business in New Zealand. ACS has cancelled the policies it underwrote and is not issuing new policies. Its present business is limited to managing the remaining and outstanding claims under policies it formerly wrote.

[2] In broad terms the proposed scheme provides for business to carry on as normal during an initial scheme period. During that period claims will be paid in the ordinary course, the directors will remain in the control of the company and the scheme administrators will play a monitoring role. A trigger event will occur if at any time it appears that, without the operation of the scheme, there would be no reasonable prospect that ACS could avoid going into liquidation. That would trigger the reserving period. During that period the scheme administrators will control the company. In that period the company will pay claims on a pro rata basis having regard to charges otherwise enforceable under s 9 of the Law Reform Act 1936. Scheme creditors will not be able to enforce against the company during the reserving period. The scheme creditors are those creditors with claims arising out of the insurance contracts previously written.

[3] The application is made under Part 15 of the Companies Act 1993 in particular s 236. The application of s 236 and its predecessors has been considered by the Court of Appeal on a number of occasions. I refer to the decision of Weatherston v Waltus Property Investments Limited.[1] The Court noted that the scope and power of the Court under s 236 is to be considered in light of the legislative intention the Court should have a broad discretion, limited only by the policy and
purposes of the Companies Act.

[1] Weatherston v Waltus Property Investments Limited [2001] 2 NZLR 203 (CA)

[4] In the

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re ACS (NZ) Ltd

Details

AGLC: Re ACS (NZ) Ltd [2012] NZHC 1396
Case: [2012] NZHC 1396
Decision Date: 19 June 2012

CaseChat Overview and Summary

In the High Court of New Zealand, ACS (NZ) Limited applied for the approval of a scheme of arrangement under Part 15 of the Companies Act 1993, aimed at managing its withdrawal from the New Zealand insurance business. The scheme involves continuing normal business operations during an initial period, followed by a reserving period if ACS appears likely to go into liquidation. Creditors with claims arising from previous insurance contracts are the scheme creditors. The court had to decide whether the scheme was fair and equitable and complied with the statutory requirements.

The court examined the scheme's compliance with statutory provisions and whether it had been fairly presented to the creditors. It also considered whether the scheme was fair and equitable and whether an intelligent and honest person of business might reasonably approve it. The court noted the support from the majority of creditors and the potential benefits of the scheme, such as a smoother transition from solvency to potential insolvency and better management of claims. The Reserve Bank raised concerns about the solvency of ACS and the lack of a pari passu principle, but the court found these concerns to be adequately addressed by the scheme's provisions and the additional support from Ecclesiastical Insurance Office.

The court concluded that the scheme was fair and equitable and approved it in its amended form. The scheme was supported by the majority of creditors and provided the best opportunity for an ordered and efficient run-off and management of claims. The court also approved the proposed amendments to the scheme and granted ACS leave to apply for further amendments if necessary.

The final orders approved the scheme of arrangement, granted leave for ACS to apply for amendments, and stated that the scheme would continue in effect if liquidators were appointed to ACS unless the court ordered otherwise.

Orders