Australian Securities and Investments Commission v Diploma Group Limited [2017] FCA 549

Australian Securities and Investments Commission v Diploma Group Limited [2017] FCA 549

Given significant evidence of insolvency, potential breaches of the Corporations Act, and lack of confidence in management, there is sufficient basis to appoint provisional liquidators. While the Chemlabs Project settlement may affect asset positions, the balance of interests and urgency justify orders for appointment, but with a short stay to allow the property transaction to settle or alternative arrangements to be proposed.

Parties
Plaintiff: Australian Securities and Investments Commission; First Defendant: Diploma Group Limited (Receivers and Managers Appointed) (Administrators Appointed) (ACN 127 462 686); Second Defendant: Diploma Construction (WA) Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (ACN 113 950 100); Third Defendant: DGX Construction Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (ACN 147 094 335); Fourth Defendant: Diploma Properties Pty Ltd (ACN 127 493 252); Twelfth Defendant: 176 Adelaide Tce Pty Ltd (ACN 142 882 513); Fourteenth Defendant: Chemlabs Emporium Pty Ltd (ACN 610 256 954); Fifth Defendant: Diploma TCO Holdings Pty Ltd (ACN 147 094 880); Sixth Defendant: Diploma Construction (NSW) Pty Ltd (ACN 134 884 067); Seventh Defendant: Diploma Capital Pty Ltd (ACN 147 094 344); Eighth Defendant: Allegro Realty Holdings Pty Ltd (ACN 147 095 109); Ninth Defendant: Diploma Development Management Pty Ltd (ACN 610 257 219); Tenth Defendant: Weststructure Pty Ltd (ACN 136 917 774); Eleventh Defendant: 24 Flinders Lane Pty Ltd (ACN 130 756 535); Thirteenth Defendant: Rockingham Serviced Apartments Pty Ltd (ACN 147 094 871); Sixteenth Defendant: 300 Lord St Pty Ltd (ACN 147 769 908); Seventeenth Defendant: 303 Campbell St Pty Ltd (ACN 147 280 233); Eighteenth Defendant: 253 West Coast Hwy Pty Ltd (ACN 147 113 773); Nineteenth Defendant: Subiaco Residential Apartments Pty Ltd (ACN 147 113 791); Twentieth Defendant: Diploma Capital Securities Pty Ltd (ACN 147 094 862); Twenty First Defendant: Allegro Realty Pty Ltd (ACN 132 727 158)
Jurisdiction
Australia
Judgment Date
12 May 2017
Procedural Posture
Corporations Appointment of Provisional Liquidator / Interlocutory Application for Appointment of Provisional Liquidators Prior to Winding Up Hearing
Outcome
Orders appointing provisional liquidators to named defendant companies, with a stay on orders until 25 May 2017 to accommodate outcome of pending property transaction.
Legal Topics
Appointment of Provisional Liquidators, Winding Up Applications, Corporate Insolvency, Interlocutory Orders
Corporations Law Appointment of Provisional Liquidators Winding Up Applications Corporate Insolvency Interlocutory Orders

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Parties

Australian Securities and Investments Commission

Plaintiff

Diploma Group Limited (Receivers and Managers Appointed) (Administrators Appointed) (ACN 127 462 686)

First Defendant

Diploma Construction (WA) Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (ACN 113 950 100)

Second Defendant

DGX Construction Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) (ACN 147 094 335)

Third Defendant

Diploma Properties Pty Ltd (ACN 127 493 252)

Fourth Defendant

176 Adelaide Tce Pty Ltd (ACN 142 882 513)

Twelfth Defendant

Chemlabs Emporium Pty Ltd (ACN 610 256 954)

Fourteenth Defendant

Diploma TCO Holdings Pty Ltd (ACN 147 094 880)

Fifth Defendant

Diploma Construction (NSW) Pty Ltd (ACN 134 884 067)

Sixth Defendant

Diploma Capital Pty Ltd (ACN 147 094 344)

Seventh Defendant

Allegro Realty Holdings Pty Ltd (ACN 147 095 109)

Eighth Defendant

Diploma Development Management Pty Ltd (ACN 610 257 219)

Ninth Defendant

Weststructure Pty Ltd (ACN 136 917 774)

Tenth Defendant

24 Flinders Lane Pty Ltd (ACN 130 756 535)

Eleventh Defendant

Rockingham Serviced Apartments Pty Ltd (ACN 147 094 871)

Thirteenth Defendant

300 Lord St Pty Ltd (ACN 147 769 908)

Sixteenth Defendant

303 Campbell St Pty Ltd (ACN 147 280 233)

Seventeenth Defendant

253 West Coast Hwy Pty Ltd (ACN 147 113 773)

Eighteenth Defendant

Subiaco Residential Apartments Pty Ltd (ACN 147 113 791)

Nineteenth Defendant

Diploma Capital Securities Pty Ltd (ACN 147 094 862)

Twentieth Defendant

Allegro Realty Pty Ltd (ACN 132 727 158)

Twenty First Defendant

Procedural Posture

Corporations Appointment of Provisional Liquidator / Interlocutory Application for Appointment of Provisional Liquidators Prior to Winding Up Hearing

Legal Issues

  1. 1 Whether provisional liquidators should be urgently appointed to the defendant companies prior to determination of winding up application
  2. 2 Whether adjournment should be granted to allow a property transaction (Chemlabs Project) to settle before considering appointment of provisional liquidators
  3. 3 Whether appointment is in the interests of creditors and the public, given ongoing administration

Ratio Decidendi

Given significant evidence of insolvency, potential breaches of the Corporations Act, and lack of confidence in management, there is sufficient basis to appoint provisional liquidators. While the Chemlabs Project settlement may affect asset positions, the balance of interests and urgency justify orders for appointment, but with a short stay to allow the property transaction to settle or alternative arrangements to be proposed.

Court Disposition

Orders appointing provisional liquidators to named defendant companies, with a stay on orders until 25 May 2017 to accommodate outcome of pending property transaction.

Orders

  • Appointment of David Mark Hodgson and Andrew Stewart Reed Hewitt as joint and several provisional liquidators to the named defendant companies under s 472(2) of the Corporations Act.
  • Provisional liquidators to report to Court and ASIC within 45 days on assets, liabilities, solvency, likely return to creditors, financial position, and suspected contraventions of the Corporations Act.