McCabe, in the matter of Andrew McCabe and Joseph Hayes in their capacity as joint and several deed administrators of the companies listed in Schedule 1 [2023] FCA 1042

McCabe, in the matter of Andrew McCabe and Joseph Hayes in their capacity as joint and several deed administrators of the companies listed in Schedule 1 [2023] FCA 1042

It is justified and reasonable for the administrators to withhold distributing funds to creditors under the DOCA until the outcome of proceedings challenging the DOCA is determined, in order to avoid unjust or prejudicial outcomes and unnecessary costs if distributions must later be unwound.

Parties
Plaintiff, Joint and Several Deed Administrator: Andrew McCabe; Plaintiff, Joint and Several Deed Administrator: Joseph Hayes; Interested Person, Creditor: Commissioner of State Revenue
Jurisdiction
Australia
Judgment Date
04 September 2023
Procedural Posture
Application Under the Corporations Act (external Administration) / Judgment on Application for Relief Under S 90 15 IPS
Outcome
Application granted.
Legal Topics
Deed of Company Arrangement, Court Directions to Administrators, External Administration, Creditor Distribution, Delay Pending Litigation
Corporations Law Insolvency Deed of Company Arrangement Court Directions to Administrators External Administration Creditor Distribution Delay Pending Litigation

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Parties

Andrew McCabe

Plaintiff, Joint and Several Deed Administrator

Joseph Hayes

Plaintiff, Joint and Several Deed Administrator

Commissioner of State Revenue

Interested Person, Creditor

Procedural Posture

Application Under the Corporations Act (external Administration) / Judgment on Application for Relief Under S 90 15 IPS

Legal Issues

  1. 1 Whether administrators are justified in not distributing funds to creditors under DOCA pending determination of related Federal Court proceedings
  2. 2 Reasonableness of withholding distributions until litigation is resolved

Ratio Decidendi

It is justified and reasonable for the administrators to withhold distributing funds to creditors under the DOCA until the outcome of proceedings challenging the DOCA is determined, in order to avoid unjust or prejudicial outcomes and unnecessary costs if distributions must later be unwound.

Court Disposition

Application granted.

Orders

  • Administrators are justified and acting reasonably in withholding distribution to creditors under the DOCA until determination of Federal Court proceeding QUD 99 of 2023 or further order.
  • Costs of proceedings to be paid in priority as part of Deed Administrators' Costs under the DOCA.