NEW ZEALAND Law and Practice Contributed by: David Weavers, Alex MacDuff, Matt Consedine and Verniel Virtucio, Russell McVeagh
of creditors. Under this structure, new creditors can become beneficiaries of the security without needing to re-take security. Security trustee structures are commonly used on New Zealand financing transactions where there are multiple lenders and/or other creditors. 6. Enforcement 6.1 Enforcement of Collateral by Non-Bank Secured Lenders New Zealand is considered a “creditor-friendly” juris - diction. When designing an enforcement strategy, lenders should consider: • the type of security that the secured lender ben - efits from (ie, all-asset, specific asset security and/ or guarantees); • the type of collateral being enforced over and the corresponding statutory requirements; • the rights and obligations under the relevant secu - rity agreement; • whether any statutory security “hardening periods” have lapsed, or whether exceptions or defences are available to protect the secured lender when enforcing within the statutory hardening periods; and • whether enforcement would be undertaken by the secured lender or via an insolvency appointment Under the PPSA, secured lenders can enforce security interests in personal property without court involve - ment in most circumstances. The secured lender is required to issue various notices (some of which can be contracted out of), will be able to release subordi - nate security interests, and has a duty to get the best price reasonably obtainable at the time of sale. Enforcement of Real Property Enforcement of security interests in real property is primarily governed by the Property Law Act 2007 (PLA). Powers (such as taking possession and/or exercising its power of sale) are typically exercisable (eg, receivers or administrators). Enforcement of Personal Property
after the occurrence of a default under a mortgage. Secured lenders should be mindful: • of the need to issue notices and for those periods to expire before completing a sale of the property; • of the duty to get the best price reasonably obtain - able at the time of sale; • that a mortgagee can release subsequent ranking security over the real property (which cannot be achieved by a receiver selling real property in the absence of a contractual right to do so); and • that when the secured lender sells (as mortgagee) real property to itself, it will require a sale via the Registrar or with approval of the High Court. Guarantees Unless the secured lender has also taken security over the guarantor’s assets, a claim under a guarantee will be an unsecured claim. Common considerations when enforcing guarantees are: • whether entry into the guarantee was appropriately authorised; • whether any applicable financial assistance requirements have been met; • release through unauthorised material variations to the principal debt; • whether the guarantor has taken independent legal advice; and • claims of undue influence or duress. Enforcement can also be implemented through the appointment of an insolvency official, as described in An express choice of foreign law to govern the con - tract will usually be upheld by the New Zealand courts as the proper law of the contract (such that Courts will refrain from assuming jurisdiction) as long as the choice is genuine and not contrary to public policy. However, New Zealand is not a party to the Hague Choice of Court Convention, and therefore proceed - ings will not automatically be stayed in favour of the parties’ choice of foreign court and Courts retain the discretion as to whether exclusive jurisdiction should be exercised in favour of the parties’ choice of court. 7.1 Impact of Insolvency Processes . 6.2 Foreign Law and Jurisdiction
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