Longley v ACN 090 609 868 Pty Ltd (in liq) (formerly Solar Systems Pty Ltd) [2010] FCA 1468

Longley v ACN 090 609 868 Pty Ltd (in liq) (formerly Solar Systems Pty Ltd) [2010] FCA 1468

The Court directed that the liquidators were justified in distributing the Silex Systems Ltd shares in specie to the secured creditors because the secured creditors agreed, such a distribution was not prohibited by the Corporations Act or contrary to public policy, priority and unsecured creditors would not be prejudiced on the evidence, contributories' rights would not be prejudiced, and the secured creditors had security interests enabling them to trace into the substitute assets.

Jurisdiction
Australia
Judgment Date
22 December 2010
Procedural Posture
Corporations Liquidation Application for Directions / Judgment and Orders on Liquidators' Application
Outcome
Direction made that the plaintiffs are justified in distributing Silex Systems Ltd shares in specie to the identified Shareholder Lenders and Bridge Lenders; plaintiffs' costs to be costs in the liquidation of the defendants.
Legal Topics
['liquidation' 'distribution in Specie to Creditors' 'secured Creditors' "liquidators' Directions"]
['corporations' 'insolvency'] ['liquidation' 'distribution in Specie to Creditors' 'secured Creditors' "liquidators' Directions"]

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Procedural Posture

Corporations Liquidation Application for Directions / Judgment and Orders on Liquidators' Application

Legal Issues

  1. 1 ['Whether liquidators in a winding up are justified in distributing assets in specie to secured creditors instead of selling the assets and distributing proceeds.' 'Whether the proposed in specie distribution of Silex Systems Ltd shares would prejudice priority creditors, unsecured creditors or contributories.']

Ratio Decidendi

The Court directed that the liquidators were justified in distributing the Silex Systems Ltd shares in specie to the secured creditors because the secured creditors agreed, such a distribution was not prohibited by the Corporations Act or contrary to public policy, priority and unsecured creditors would not be prejudiced on the evidence, contributories' rights would not be prejudiced, and the secured creditors had security interests enabling them to trace into the substitute assets.

Court Disposition

Direction made that the plaintiffs are justified in distributing Silex Systems Ltd shares in specie to the identified Shareholder Lenders and Bridge Lenders; plaintiffs' costs to be costs in the liquidation of the defendants.

Orders

  • ['The plaintiffs are justified in distributing in specie to the Shareholder Lenders and Bridge Lenders indentified in paragraphs 12 and 20 of the affidavit of Stephen Graham Longley sworn 21 October 2010, shares in Silex Systems Ltd, which the defendants received in partial consideration for the sale of their...