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Debt Recovery

Have you sold goods or services to a company and still not been paid? 

The team at Davenports Harbour Lawyers can support you through the debt recovery process and advise you on what options are available to you to recover the debt. 

Recovering debt from a company – what are your options?

If you have sold goods or services to a company and not been paid, there is a process available to you to recover the debt.


Written Demand

If you have been unsuccessful in recovering the debt yourself, you should instruct your solicitor to make a formal written demand to the company (the “debtor”). This demand will require that the debtor make payment of the debt within a certain, but limited, period of time.

A written demand from your solicitor puts the debtor on notice that you are progressing your recovery of the debt through formal channels, and in many cases can prompt the debtor to pay the debt immediately or to enter into a payment plan with you to repay the debt over a set period of time. 

In the event you agree to a payment plan with a debtor, it is important to record this payment plan in a formal agreement. It may be appropriate to require the debtor to give you security for the debt, for example by way of a general security agreement or personal guarantees. 


Statutory Demand

A written demand can also be the opportune place to advise the debtor that you may issue a statutory demand against them if they do not repay the debt, or into a satisfactory arrangement with you. 

A statutory demand is a formal document served against the debtor under the Companies Act 1993. It requires the debtor to repay the debt or enter into a settlement arrangement with you within 15 working days from the date that the demand is served. If the debtor does not satisfy your demand (or file a dispute in respect of the demand) you then can apply to the court to put the debtor into liquidation. 

A statutory demand is a document that can have serious impacts on the debtor. As a result and when served in the correct circumstances, it can be a very effective option for recovering the payment of a debt. However, it is important to seek the advice of your solicitor before issuing a statutory demand to ensure that it is the appropriate course of action to take in your circumstances. 


What if the person who owes me debt is not a company?

While a statutory demand can only be issued under the Companies Act 1993, there are other options to recover the debt from a person or an entity that is not a company.


Debt recovery in the context of the COVID-19 pandemic

It is important to note that the usual debt recovery options may not always be appropriate in the context of the COVID-19 pandemic. This is because, on 15 May 2020, the New Zealand government introduced the COVID-19 Response (Further Management Measures) Legislation Act 2020. This Act, among other changes, introduces further provisions to the Companies Act 1993, including a business debt hibernation scheme.

The business debt hibernation scheme is aimed at helping businesses that have been impacted by COVID-19 manage their debts.  

In particular, it allows companies, trusts, and other business entities in certain situations to receive temporary protection against paying their debts (or part of them) to creditors for up to a period of six months.  

The scheme does not allow the debtor to “get out” of paying its debts, and there are various requirements that will need to be met before a business can enter into the scheme. However, it is an important consideration to keep in mind and talk to your solicitor about when deciding which debt recovery option is the appropriate choice for you. 


If you would like to hear more about your options for recovering a debt, or how the debt hibernation scheme may impact your ability to recover a debt, you can contact our specialist team of commercial lawyers at Davenports Harbour Lawyers. 


The above article provides a brief overview of potential debt recovery options against New Zealand registered companies. It is not intended to be a comprehensive outline of debt recovery or the legislative changes that are being introduced as a result of the COVID-19 pandemic. It is also not intended to be constituted as legal advice. If you require any legal advice or further information about this article, please contact the team at Davenports Harbour Lawyers to discuss.