This toolkit is a guide for lawyers to Practical Law New Zealand's and Practical Law UK's corporate insolvency and restructuring content. It is for use by lawyers who may come across insolvency issues, for example, due to a corporate client insolvency or who otherwise need to understand the matters that arise when a business is in financial difficulty.

Understanding the issues that can arise when a corporate client or business is facing insolvency, or being placed into an insolvency process, is important as the insolvency can have serious consequences for anyone dealing with that company due to restrictions on what the company can do and the ability of the third party to deal with the company and recover any money owed to it.

It is often important to determine whether a company is insolvent or not.

Insolvency is usually a prerequisite for the initiation of formal corporate insolvency proceedings. If a company is insolvent when it enters into a certain transaction, and formal corporate insolvency proceedings are commenced within a specified time, that transaction may be open to challenge.

Directors also owe certain duties once a company is insolvent and certain company law procedures may only be taken by solvent companies. For more information, see Practice note, Corporate insolvency and related directors' duties.

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For an introduction to corporate insolvency law, including a brief overview of the corporate insolvency procedures available, see Practice note: overview, Corporate insolvency: a guide. For information on the following corporate insolvency processes, see Practice note: overviews:

For information about the effect of corporate insolvency procedures on the debtor company and key stakeholders, see Checklists:

For information on how assets are distributed to creditors in insolvency proceedings, including links to information about the order of priority of creditors' claims in corporate insolvency in a number of other jurisdictions, see Practical Law UK's Practice note, How are assets distributed to creditors in corporate insolvency procedures?. This resource should be reviewed carefully before being used in a New Zealand law context.

A client or business may be suspected of being in financial difficulty. For guidance on assessing whether a company is in financial difficulty, see Practice notes:

Checklist, Dos and don'ts for directors of a company in financial distress is a list of dos and don'ts for directors of a company in financial distress to ensure that they avoid the risk of personal liability for reckless trading and otherwise comply with their statutory and common law duties.

See also:

Corporate insolvency processes are often used by creditors who are owed money by a debtor company. Creditors need to assess whether a particular process is available and suitable for their needs.

Each corporate insolvency process is different and Practical Law has the following guidance.

Cross-border issues play an increasingly important part in corporate insolvency law and practice. International elements may present themselves during the course of local insolvency proceedings or where local property is the subject matter of foreign proceedings. Practical Law UK's Practice note, Cross-border insolvencies provides guidance on these issues. This resource should be reviewed carefully before being used in a New Zealand law context.

Recognition of insolvency proceedings across different jurisdictions may be crucial to the success of formal corporate restructuring and insolvency processes (such as schemes of arrangement and voluntary administrations). Practical Law UK's Practice note, Cross-border recognition issues in corporate recovery and insolvency provides detailed guidance on this. This resource should be reviewed carefully before being used in a New Zealand law context.

Cross-border restructuring (the process where a debtor and its creditors agree to reorganise its liabilities so the debtor's business may survive), take many forms but in general terms a restructuring is cross-border where the assets and interests of the debtor are situated in more than one jurisdiction. Practical Law UK's Practice note, Planning a cross-border restructuring looks at the issues that arise within this context. This resource should be reviewed carefully before being used in a New Zealand law context.