CHU v HEALTH DISTRIBUTORS (HOLDINGS) LIMITED (IN LIQUIDATION) [2019] NZHC 2221 [5 September 2019]

CHU v HEALTH DISTRIBUTORS (HOLDINGS) LIMITED (IN LIQUIDATION) [2019] NZHC 2221[5 September 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-001561[2019] NZHC 2221UNDER the Companies Act 1993IN THE MATTER OF an application to terminate a liquidationBETWEEN MICHAEL SIU YIN CHUApplicantAND HEALTH DISTRIBUTORS (HOLDINGS)LIMITED (IN LIQUIDATION)RespondentHearing: 5 September 2019Counsel: Z T Mora for the ApplicantJudgment: 5 September 2019(ORAL) JUDGMENT OF KATZ JSolicitors: McCaw Lewis, HamiltonIntroduction[1] Michael Siu Yin Chu has filed an application for an order under s 250 of theCompanies Act 1993 ("Act") terminating the liquidation of Health Distributors(Holdings) Ltd (in liquidation) ("Health Distributors"). The application is supportedby an affidavit from Mr Chu, to which various documents are exhibited.[2] Mr Chu and his wife are the directors of Health Distributors. Mr Chu has beena director since October 2007. Health Distributors' ultimate holding company isRiverglade Holdings Ltd ("Riverglade") which is the 100 per cent shareholder ofHealth Distributors. Mr Chu and his wife are the two directors of Riverglade and alsoeach own 50 per cent of the shares in Riverglade. Riverglade consents to theapplication to terminate the liquidation of Health Distributors.[3] Mr Chu and his wife are in the process of refinancing all of their companies,Mr Chu deposes however that the current liquidation of Health Distributors has placeda hold on their ability to complete this. It is for that reason that he seeks an orderterminating the liquidation of Health Distributors.[4] Mr Chu deposes that for the last six years Health Distributors has been used asa special vehicle entity for the sole purpose of holding two industrial units in LowerHutt ("the Units"). The only assets of Health Distributors were the Units. Liquidationof Health Distributors arose due to unpaid body corporate levies and costs totalling$84,015. The Units were subsequently sold by the liquidators for $178,600.[5] All creditors who lodged proofs of debt have now been paid in full or haveconsented to the application by providing signed consents to the termination of HealthDistributors' liquidation. One purported creditor did not lodge a proof of debt in theliquidation. The amount subsequently claimed by that creditor was $8,911.35.Riverglade accordingly provided that sum to the liquidators to enable them to pay theclaimed debt.[6] The liquidators recovered the majority of their own costs from GST refunds.Riverglade met the shortfall owing in respect of the liquidators' costs. The liquidatorshave provided a signed consent to the termination of the liquidation and a draft of theirfinal report, which will be filed upon a termination order being made.[7] In order to terminate a liquidation pursuant to s 250 of the Act, the Court mustbe satisfied that:1(a) all creditors have been paid in full or satisfactory provision has beenmade for them to be paid or they have consented; and(b) the liquidators' costs have been paid or secured; and(c) the shareholders have given their consent or would be in no worseposition than if the liquidation had proceeded to its conclusion; and(d) the termination of the liquidation is in the public interest.[8] Each of these criteria are met in this case. I note that there are no public interestconcerns, as Health Distributors does not trade. Taking all of the matters I haveoutlined into account, I am satisfied that it is just and equitable to terminate theliquidation of Health Distributors, and I order accordingly.__________________________Katz J1 Morton-Jones v Rodney Management Ltd (in liquidation) [2017] NZHC 125; Re Bell BlockLumber Ltd (in liquidation) (1992) 6 NZCLC 67, 690; and Canterbury Squid Company Ltd v SouthWest Fishery Ltd HC Wanganui M 31/93, 24 August 1993.