Partners Michael Arthur and Michael Harper of Chapman Tripp’s Restructuring and Insolvency Group acted for BDO Spicers, the voluntary administrators of Icon Digital Entertainment Ltd. Icon ran the high-profile Sounds music chain, a group of Blockbuster stores and the Games Plus stores. It owed creditors almost NZ$20m.
This was the first voluntary administration in New Zealand since the introduction of the new law on 1 November 2007.
Michael Harper said that initially opting for voluntary administration rather than receivership or liquidation allowed Icon Digital to gain protection from its creditors while the administrators were able to trade through the busy Christmas period and explore a going concern sale. Ultimately it was not possible and the company was placed into liquidation.
For the first time in New Zealand, a company was able to take advantage of unique statutory protection in order to explore a potential restructuring. Voluntary administration provides troubled companies with an added opportunity to restructure or recapitalise their business.
Although ultimately the voluntary administration did not result in a restructuring of Icon, the administration did lead to going concern sales of assets.
The Icon administration required the team to apply twice to court to resolve procedural aspects of the new legislation, to resolve claims by secured creditors and assist the administrators with the many and various new procedures introduced by the voluntary administration regime.