In the matter of Shield Mercantile Pty Ltd [2020] NSWSC 1545

In the matter of Shield Mercantile Pty Ltd [2020] NSWSC 1545

Leave under s 444GA was granted because the evidence showed the Company was plainly insolvent, had a deficiency of assets, and shareholders would receive no recovery in a liquidation; Mr Shields led no evidence establishing that the asserted repatriation claims had the value he attributed to them or that an indefinite stay of a winding up was a viable alternative. The s 447A order was made because the DOCA contained a plain error omitting WBC, WBC required correction before consenting, interested persons did not oppose the correction, and the correction would allow the DOCA to proceed for the benefit of creditors and employees.

Jurisdiction
Australia
Judgment Date
31 August 2020
Procedural Posture
Application in the Equity Corporations List Under Ss 444 GA and 447 a of the Corporations Act 2001 (cth) / Principal Judgment on Originating Process Filed on 30 July 2020
Outcome
Leave granted pursuant to s 444GA of the Corporations Act to transfer the Company shares. Order made pursuant to s 447A of the Corporations Act correcting an error in the DOCA. Plaintiffs' costs of the proceedings to be costs in the deed administration.
Legal Topics
['voluntary Administration' 'deed of Company Arrangement' 'transfer of Shares Under S 444 Ga' 'unfair Prejudice to Shareholders' 'variation of DOCA Under S 447 A' 'stay of Winding Up']
['corporations' 'insolvency'] ['voluntary Administration' 'deed of Company Arrangement' 'transfer of Shares Under S 444 Ga' 'unfair Prejudice to Shareholders' 'variation of DOCA Under S 447 A' 'stay of Winding Up']

Case Brief

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Procedural Posture

Application in the Equity Corporations List Under Ss 444 GA and 447 a of the Corporations Act 2001 (cth) / Principal Judgment on Originating Process Filed on 30 July 2020

Legal Issues

  1. 1 ['Whether leave should be granted under s 444GA of the Corporations Act 2001 (Cth) to transfer all issued shares in the Company in accordance with the DOCA.' 'Whether the proposed transfer would unfairly prejudice members of the Company.' "Whether asserted repatriation claims against banks gave the Company's shares residual equity value in a liquidation." 'Whether an indefinite stay of winding up was an available or appropriate alternative.' 'Whether an order should be made under s 447A of the Corporations Act 2001 (Cth) to correct a plain error in the DOCA by inserting a reference to WBC.']

Ratio Decidendi

Leave under s 444GA was granted because the evidence showed the Company was plainly insolvent, had a deficiency of assets, and shareholders would receive no recovery in a liquidation; Mr Shields led no evidence establishing that the asserted repatriation claims had the value he attributed to them or that an indefinite stay of a winding up was a viable alternative. The s 447A order was made because the DOCA contained a plain error omitting WBC, WBC required correction before consenting, interested persons did not oppose the correction, and the correction would allow the DOCA to proceed for the benefit of creditors and employees.

Court Disposition

Leave granted pursuant to s 444GA of the Corporations Act to transfer the Company shares. Order made pursuant to s 447A of the Corporations Act correcting an error in the DOCA. Plaintiffs' costs of the proceedings to be costs in the deed administration.

Orders

  • ['Orders made in accordance with paragraphs 1 and 2 of the Originating Process filed on 30 July 2020.' 'Leave granted under s 444GA of the Corporations Act 2001 (Cth) for the transfer of all issued shares held by each member of the Company in accordance with the DOCA.' 'Order made under s 447A of the Corporations...