In the matter of HIH Underwriting Insurance (Australia) Pty Ltd (in liquidation and subject to a scheme of arrangement) [2015] NSWSC 36

In the matter of HIH Underwriting Insurance (Australia) Pty Ltd (in liquidation and subject to a scheme of arrangement) [2015] NSWSC 36

It is just and equitable to direct that the reinsurance receipts be paid to the applicant creditors (after deduction of expenses and any prior distribution) and not be distributed according to s 562A(2)–(3), given the applicants contracted for specific reinsurance cover, paid the relevant premiums, and would be severely prejudiced by application of the statutory allocation.

Parties
First Plaintiff: Amaca Pty Ltd (under NSW administered winding up); Second Plaintiff: Amaba Pty Ltd (under NSW administered winding up); Third Plaintiff: ABN 60 Pty Ltd (under NSW administered winding up); First Defendant: A G McGrath & C J Honey as liquidators of the HIH Group of Companies; Second Defendant: HIH Underwriting & Insurance (Australia) Pty Ltd (in liquidation and subject to a scheme of arrangement)
Jurisdiction
Australia
Judgment Date
10 February 2015
Procedural Posture
Corporations Application for Orders During Liquidation / Interlocutory Application
Outcome
Orders as sought by consent; reinsurance receipts to be paid to the First Plaintiff after deductions; no order as to costs; matter stood over.
Legal Topics
Winding Up, Reinsurance Proceeds, Liquidator's Application, Application of Insurance Recoveries
Corporations Law Insolvency Law Winding Up Reinsurance Proceeds Liquidator's Application Application of Insurance Recoveries

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Parties

Amaca Pty Ltd (under NSW administered winding up)

First Plaintiff

Amaba Pty Ltd (under NSW administered winding up)

Second Plaintiff

ABN 60 Pty Ltd (under NSW administered winding up)

Third Plaintiff

A G McGrath & C J Honey as liquidators of the HIH Group of Companies

First Defendant

HIH Underwriting & Insurance (Australia) Pty Ltd (in liquidation and subject to a scheme of arrangement)

Second Defendant

Procedural Posture

Corporations Application for Orders During Liquidation / Interlocutory Application

Legal Issues

  1. 1 Whether it is just and equitable to order that s 562A(2) and (3) of the Corporations Act 2001 (Cth) not apply to specific reinsurance receipts and those receipts instead be paid to the applicant creditors.

Ratio Decidendi

It is just and equitable to direct that the reinsurance receipts be paid to the applicant creditors (after deduction of expenses and any prior distribution) and not be distributed according to s 562A(2)–(3), given the applicants contracted for specific reinsurance cover, paid the relevant premiums, and would be severely prejudiced by application of the statutory allocation.

Court Disposition

Orders as sought by consent; reinsurance receipts to be paid to the First Plaintiff after deductions; no order as to costs; matter stood over.

Orders

  • Subsections 562A(2) and 562A(3) of the Corporations Act 2001 (Cth) do not apply to $226,339 from Peoples Insurance Company of China and $74,420 from Nipponkoa Insurance Company Limited.
  • Receipts must be applied by the Defendants by deducting expenses incidental to each receipt (2.5% for Nippon receipt; 20% for PICC receipt), deducting any dividends or distributions already paid, and paying the balance to the First Plaintiff.