Re Spargold Enterprises Pty Limited: ex parte Geoffrey David McDonald & Anor [1999] NSWSC 623

Re Spargold Enterprises Pty Limited: ex parte Geoffrey David McDonald & Anor [1999] NSWSC 623

The Deed Administrators owed a duty of impartiality to all creditors, both pre-DCA and post-DCA. A distribution under the Deed of Company Arrangement would unfairly prejudice post-DCA creditors by paying pre-DCA creditors while leaving post-DCA creditors unpaid, and the deed had no further purpose. The Deed Administrators were interested persons capable of applying for termination under s445D, so the proper course was to terminate the deed, wind up the company, and appoint the Deed Administrators as liquidators, with the orders suspended to allow creditors an opportunity to make submissions.

Jurisdiction
Australia
Judgment Date
21 June 1999
Procedural Posture
Application by Deed Administrators to Terminate a Deed of Company Arrangement and Wind Up the Company / Ex Parte Ex Tempore Judgment
Outcome
Deed of Company Arrangement terminated and company to be wound up, with orders suspended subject to further order.
Legal Topics
['deed of Company Arrangement' 'duty of Administrator to Act Impartially Between Creditors' 'pre DCA and Post DCA Creditors' 'termination of Deed of Company Arrangement' 'standing of Deed Administrator' 'winding Up']
['corporations' 'insolvency'] ['deed of Company Arrangement' 'duty of Administrator to Act Impartially Between Creditors' 'pre DCA and Post DCA Creditors' 'termination of Deed of Company Arrangement' 'standing of Deed Administrator' 'winding Up']

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Procedural Posture

Application by Deed Administrators to Terminate a Deed of Company Arrangement and Wind Up the Company / Ex Parte Ex Tempore Judgment

Legal Issues

  1. 1 ['Whether a Deed Administrator owes a duty of impartiality to both pre-DCA and post-DCA creditors.' 'Whether permitting a distribution under the Deed of Company Arrangement would unfairly prejudice post-DCA creditors.' 'Whether a Deed Administrator is an interested person able to apply for termination of the Deed of Company Arrangement under s445D of the Corporations Law.' 'Whether the Deed of Company Arrangement should be terminated and the company wound up.']

Ratio Decidendi

The Deed Administrators owed a duty of impartiality to all creditors, both pre-DCA and post-DCA. A distribution under the Deed of Company Arrangement would unfairly prejudice post-DCA creditors by paying pre-DCA creditors while leaving post-DCA creditors unpaid, and the deed had no further purpose. The Deed Administrators were interested persons capable of applying for termination under s445D, so the proper course was to terminate the deed, wind up the company, and appoint the Deed Administrators as liquidators, with the orders suspended to allow creditors an opportunity to make submissions.

Court Disposition

Deed of Company Arrangement terminated and company to be wound up, with orders suspended subject to further order.

Orders

  • ['Pursuant to s445D(1)(g) of the Corporations Law and all other powers, the Deed of Company Arrangement applicable to Spargold Enterprises Pty Limited be terminated and the company be wound up and the Deed Administrators appointed its Liquidators, such order not to come into effect until the expiry of 12 July 1999...