If a creditor receives a payment within two years of its debtor going into receivership the payment is at risk of being declared voidable by the liquidator.

The Supreme Court has restricted the payments that liquidators can challenge by protecting payments given for value.

The previous interpretation by the Court of Appeal had allowed claw backs of payments where the value given was at the time of the original provision of the goods/service and not at the time payment was received.

The new interpretation by the Supreme Court extends the definition of “given for value” to the original provision of the goods/services.

If the creditor was unaware that the debtor company was in financial trouble, received the payment in good faith and gave value for the payment then it will be protected from being clawed back. This is good news for creditors but only applies if you do not know they are in trouble so will not protect those payments squeezed out of a struggling debtor if they fall over within two years.


Alan Knowsley

Debt Collection Lawyer Wellington