Oppression remedy meets disputed debt

An interesting matter came up in Vance and Millard as trustees of the Orana Trust v Vey Group Ltd and Fugle [2020] NZHC 2592.

Bringing proceedings under the oppression remedy (s 174 of the Companies Act, 1993) cannot be used as a debt recovery proceeding, claimed one of the parties in this case. While the court agreed with this basic premise, it noted that the resolution of disputes relating to the debt was would impact the valuation of shares where the remedy (under s 174) was for minority shareholders to be bought out. It notes as follows [19]:

… the valuation prepared for Mr Fugle on the basis of the 2019 financial accounts included the Orana debt. For the purposes of this valuation, the valuers discounted the Orana debt to $1,078,433 on the basis of evidence from the trustees in support of the s 174 application. In other words, including the Orana debt as a liability has reduced the net asset value of the company and, in turn, the value of the minority shareholding in Vey. This confirms the view taken in the High Court and the Court of Appeal that a buy-out of the minority shareholding will not be achievable on a fair basis without resolution of the Orana debt. (Emphasis mine.)

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