QUESTION THREE

Timaru Electrical Co Ltd (TEL) is an unsecured creditor of MacKenzie Construction Co Ltd

(MCL). TEL is owed $200,000 by MCL, and this amount has been outstanding since May 2016.

TEL (including through its lawyers) has contacted MCL on numerous occasions without

satisfaction, and has also discovered that other suppliers of goods and services report similar

problems with non-payment of debts.

Required:

(a) Explain to TEL why it cannot appoint a receiver.

(b) Explain to TEL the grounds upon which it can apply to the Court for a liquidator to be appointed for MCL.

(c) Assuming TEL is successful and the Court has appointed a liquidator, explain to TEL how a liquidator decides the order of priority for payment of the various claims or debts against MCL and where its debt will fall in that order, referring to the relevant provisions of the Companies Act 1993 in your answer.