In the Matter of Addstone Pty Ltd (in liq); Macks, Peter Ivan [1998] FCA 638

In the Matter of Addstone Pty Ltd (in liq); Macks, Peter Ivan [1998] FCA 638

The Funding Arrangement disposed to the insurer a share of the proceeds of the proposed claims and therefore constituted a sale or disposition of part of the property of the Emanuel group within s 477(2)(c) of the Corporations Law. The liquidator had explored available funding options, major creditors were not prepared to fund the claims, the companies' available funds were insufficient, creditors would not be worse off under the arrangement, and the liquidator had legal advice supporting pursuit of the claims. In those circumstances the liquidator was acting bona fide and the Court gave the direction sought under s 479(3).

Jurisdiction
Australia
Judgment Date
09 June 1998
Procedural Posture
Liquidator's Application for Directions Under S 479(3) of the Corporations Law / Application for Directions as to Power to Enter Into Proposed Litigation Funding Arrangements
Outcome
Application granted; direction made that the liquidator has power under the Corporations Law to enter into the Funding Arrangement.
Legal Topics
["liquidator's Powers" 'sale or Disposition of Company Property' 'causes of Action as Property' 'maintenance and Champerty' 'creditor Consultation' 'funding Arrangement for Litigation']
['corporations' 'insolvency' 'liquidation' 'litigation Funding'] ["liquidator's Powers" 'sale or Disposition of Company Property' 'causes of Action as Property' 'maintenance and Champerty' 'creditor Consultation' 'funding Arrangement for Litigation']

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Procedural Posture

Liquidator's Application for Directions Under S 479(3) of the Corporations Law / Application for Directions as to Power to Enter Into Proposed Litigation Funding Arrangements

Legal Issues

  1. 1 ['Whether the liquidator had power under s 477(2)(c) of the Corporations Law to enter into the Funding Arrangement.' 'Whether the Funding Arrangement constituted a sale or disposition of property of the Emanuel group.' 'Whether the proposed funding arrangement would offend the law against maintenance or champerty.' 'Whether the absence of approval by creditors as a body prevented the Court from giving the direction sought.' 'Whether the liquidator was acting bona fide and for the benefit of creditors in entering into the Funding Arrangement.']

Ratio Decidendi

The Funding Arrangement disposed to the insurer a share of the proceeds of the proposed claims and therefore constituted a sale or disposition of part of the property of the Emanuel group within s 477(2)(c) of the Corporations Law. The liquidator had explored available funding options, major creditors were not prepared to fund the claims, the companies' available funds were insufficient, creditors would not be worse off under the arrangement, and the liquidator had legal advice supporting pursuit of the claims. In those circumstances the liquidator was acting bona fide and the Court gave the direction sought under s 479(3).

Court Disposition

Application granted; direction made that the liquidator has power under the Corporations Law to enter into the Funding Arrangement.

Orders

  • ['The liquidator as liquidator of the Emanuel group has power under the Law to enter into the Funding Arrangement, being the arrangement and transactions identified in the documents annexed to the affidavit of the liquidator sworn on 29 May 1998.' 'The annexure to that affidavit be confidential and not be available...