Australian Securities and Investments Commission v Diploma Group Limited (No 4) [2017] FCA 1107

Australian Securities and Investments Commission v Diploma Group Limited (No 4) [2017] FCA 1107

Given the significant and ongoing insolvency of the Diploma Group companies, the substantial deficiencies in assets versus liabilities, the lack of confidence in the management due to suspected contraventions of the Corporations Act and failure of corporate governance, and the lack of rigorous evidence or benefit of the proposed DOCA, the court is not satisfied that an adjournment is justified and orders the winding up of all defendant companies under s 459A and s 461(1)(k) of the Corporations Act 2001 (Cth).

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); 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); Twelfth Defendant: 176 Adelaide Tce Pty Ltd (ACN 142 882 513); Thirteenth Defendant: Rockingham Serviced Apartments Pty Ltd (ACN 147 094 871); Fourteenth Defendant: Chemlabs Emporium Pty Ltd (ACN 610 256 954); Sixteenth Defendant: 300 Lord St Pty Ltd (ACN 147 769 908); Seventeenth Defendant: 303 Campbell St Pty Ltd (ACN 147 280 233); Eighteenth Defendant: 254 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
06 September 2017
Procedural Posture
Corporations Winding Up Application / Judgment on Winding Up Application and Orders
Outcome
Winding up of all defendants ordered; adjournment application dismissed.
Legal Topics
Winding Up on Just and Equitable Grounds, Insolvency Under Corporations Act, Appointment of Liquidators, DOCA (deed of Company Arrangement), Corporate Governance
Corporations Law Insolvency Winding Up on Just and Equitable Grounds Insolvency Under Corporations Act Appointment of Liquidators DOCA (deed of Company Arrangement) Corporate Governance

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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

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

176 Adelaide Tce Pty Ltd (ACN 142 882 513)

Twelfth Defendant

Rockingham Serviced Apartments Pty Ltd (ACN 147 094 871)

Thirteenth Defendant

Chemlabs Emporium Pty Ltd (ACN 610 256 954)

Fourteenth Defendant

300 Lord St Pty Ltd (ACN 147 769 908)

Sixteenth Defendant

303 Campbell St Pty Ltd (ACN 147 280 233)

Seventeenth Defendant

254 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 Winding Up Application / Judgment on Winding Up Application and Orders

Legal Issues

  1. 1 Whether the companies should be wound up under s 459A and s 461(1)(k) of the Corporations Act 2001 (Cth)
  2. 2 Whether to adjourn the winding up to allow creditors to consider a DOCA proposal
  3. 3 Whether there is a lack of confidence in the management of the company justifying winding up

Ratio Decidendi

Given the significant and ongoing insolvency of the Diploma Group companies, the substantial deficiencies in assets versus liabilities, the lack of confidence in the management due to suspected contraventions of the Corporations Act and failure of corporate governance, and the lack of rigorous evidence or benefit of the proposed DOCA, the court is not satisfied that an adjournment is justified and orders the winding up of all defendant companies under s 459A and s 461(1)(k) of the Corporations Act 2001 (Cth).

Court Disposition

Winding up of all defendants ordered; adjournment application dismissed.

Orders

  • The Defendants be wound up under s 459A and s 461(1)(k) of the Corporations Act 2001 (Cth).
  • Appointment of David Mark Hodgson and Andrew Stewart Reed Hewitt as joint and several liquidators for each Defendant under s 472(1).