In the matter of Dungowan Manly Pty Limited (in liquidation) [2018] NSWSC 1083

In the matter of Dungowan Manly Pty Limited (in liquidation) [2018] NSWSC 1083

The Court was not satisfied that issuing a further levy, or entering into the Funding Agreement to support that levy, would advance the liquidation or proposed voluntary administration. Because the liquidators were not funded to enforce any levy, there was little realistic prospect that shareholders would voluntarily pay or settle, the suggested receivable or assignment value was speculative, and the proposed course was likely to incur further cost and delay without sufficient benefit. The liquidators were therefore not justified in taking the proposed steps, but were justified in not taking them.

Jurisdiction
Australia
Judgment Date
06 July 2018
Procedural Posture
Application for Directions in a Winding Up Under the Corporations Act 2001 (cth) / Amended Interlocutory Process Heard in the Equity Corporations List
Outcome
Directions made that the liquidators are justified in not taking the proposed steps; costs ordered to be costs in the winding up; remuneration application stood over.
Legal Topics
['winding Up' 'application for Directions' "liquidators' Powers and Duties" 'further Levy to Shareholders' 'funding Agreement' 'voluntary Administration']
['corporations' 'insolvency'] ['winding Up' 'application for Directions' "liquidators' Powers and Duties" 'further Levy to Shareholders' 'funding Agreement' 'voluntary Administration']

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 1 Authorities cited 2 Party arguments 2 Amounts and remedies 1
Sign in to unlock

Procedural Posture

Application for Directions in a Winding Up Under the Corporations Act 2001 (cth) / Amended Interlocutory Process Heard in the Equity Corporations List

Legal Issues

  1. 1 ['Whether the liquidators were justified in entering into the proposed Funding Agreement.' 'Whether the liquidators or proposed voluntary administrators were justified in issuing a further levy to shareholders when they were not funded to bring recovery or enforcement proceedings.' 'Whether leave should be granted under s 436B of the Corporations Act 2001 (Cth) for the liquidators to appoint themselves as voluntary administrators of the Company.' 'Whether directions should be made that the liquidators were justified in not taking the steps proposed in the Interlocutory Processes.' "Whether the liquidators' costs of the application should be costs in the winding up."]

Ratio Decidendi

The Court was not satisfied that issuing a further levy, or entering into the Funding Agreement to support that levy, would advance the liquidation or proposed voluntary administration. Because the liquidators were not funded to enforce any levy, there was little realistic prospect that shareholders would voluntarily pay or settle, the suggested receivable or assignment value was speculative, and the proposed course was likely to incur further cost and delay without sufficient benefit. The liquidators were therefore not justified in taking the proposed steps, but were justified in not taking them.

Court Disposition

Directions made that the liquidators are justified in not taking the proposed steps; costs ordered to be costs in the winding up; remuneration application stood over.

Orders

  • ['Pursuant to s 511 of the Corporations Act 2001 (Cth) and s 90-15 of the Insolvency Practice Schedule (Corporations), direct that Mr Simon Cathro and Mr Christopher Darin as joint and several liquidators of Dungowan Manly Pty Ltd (in liq) are justified in not taking the steps set out in paragraphs 1–6 of the...