New Zealand Legislation: Acts

17A Subordinated trusts not security interests

• For the avoidance of doubt, a beneficial interest in personal property held by a creditor (the senior creditor) of a person who has been adjudged bankrupt or put into liquidation (the insolvent debtor) is not a security interest if—

  • (a) the personal property is property that has been distributed by the Official Assignee under the Insolvency Act 2006 or by a liquidator under the Companies Act 1993 to another creditor of the insolvent debtor (the subordinated creditor); and

  • (b) the beneficial interest was created or provided for under the terms of a security (as defined in section 2D of the Securities Act 1978) that is held by the subordinated creditor; and

  • (c) under those terms, the subordinated creditor must hold the personal property on trust for the senior creditor; and

  • (d) the purpose of those terms is to postpone or subordinate the right of the subordinated creditor to the performance of all or any part of an obligation of the insolvent debtor to the right of the senior creditor to the performance of all or any part of another obligation of the insolvent debtor.

  Section 17A: inserted, on 15 April 2004, by section 6 of the Personal Property Securities Amendment Act 2004 (2004 No 30).

  Section 17A(a): amended, on 3 December 2007, by section 445 of the Insolvency Act 2006 (2006 No 55).