Walker and Moloney, in the matter of ZYX Developmental Learning Centres Pty Limited (in liq) (Receivers and Managers Appointed) [2011] FCA 1110

Walker and Moloney, in the matter of ZYX Developmental Learning Centres Pty Limited (in liq) (Receivers and Managers Appointed) [2011] FCA 1110

The Court was satisfied that the requested directions and orders should be made because the proposed funding agreement was necessary to enable pursuit of a potential unfair preference claim, the liquidators lacked available funds, the proposed defendant appeared able to satisfy a judgment, the funding agreement appeared to be on normal commercial terms, and seeking Court approval was a prudent and proper course where committee approval was uncertain.

Jurisdiction
Australia
Judgment Date
21 October 2011
Procedural Posture
Corporations Application for Approval for Liquidators to Enter Into a Litigation Funding Agreement on Behalf of a Company / Federal Court Application for Directions Under S 511 of the Corporations Act 2001 (cth) and Orders Under S 477(2 B)
Outcome
Application granted; directions and orders made approving entry into the litigation funding agreement and related fee agreements, with confidentiality and costs orders.
Legal Topics
["liquidators' Powers" 'court Approval Under S 477(2 B)' 'directions Under S 511' 'unfair Preference Claim' 'confidentiality Orders']
['corporations' 'insolvency' 'litigation Funding'] ["liquidators' Powers" 'court Approval Under S 477(2 B)' 'directions Under S 511' 'unfair Preference Claim' 'confidentiality Orders']

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Procedural Posture

Corporations Application for Approval for Liquidators to Enter Into a Litigation Funding Agreement on Behalf of a Company / Federal Court Application for Directions Under S 511 of the Corporations Act 2001 (cth) and Orders Under S 477(2 B)

Legal Issues

  1. 1 ['Whether the liquidators were justified in entering into a funding agreement with Litigation Lending Services Limited.' 'Whether the Court should approve the liquidators entering into an agreement on behalf of the company under s 477(2B) of the Corporations Act 2001 (Cth).' 'Whether confidentiality orders should be made for the legal advice and proposed funding agreement.' 'Whether the liquidators should be approved to enter fee agreements with lawyers and counsel for the proposed litigation.']

Ratio Decidendi

The Court was satisfied that the requested directions and orders should be made because the proposed funding agreement was necessary to enable pursuit of a potential unfair preference claim, the liquidators lacked available funds, the proposed defendant appeared able to satisfy a judgment, the funding agreement appeared to be on normal commercial terms, and seeking Court approval was a prudent and proper course where committee approval was uncertain.

Court Disposition

Application granted; directions and orders made approving entry into the litigation funding agreement and related fee agreements, with confidentiality and costs orders.

Orders

  • ['DIRECTS pursuant to section 511(1) of the Corporations Act 2001 (the Act) that the First Plaintiffs are justified in entering into the funding agreement with Litigation Lending Services Limited in the form set out in Confidential Exhibit "GMM3" to the affidavit of Gregory Michael Moloney sworn on 20 October 2011...