Bathurst City Council v Event Management Specialist Pty Ltd & 3 Ors [2001] NSWSC 34

Bathurst City Council v Event Management Specialist Pty Ltd & 3 Ors [2001] NSWSC 34

The Deed of Company Arrangement (DCA) should be terminated under s445D(1)(f)(ii) of the Corporations Law because the availability of new litigation funding and a higher, guaranteed payment to creditors (5.5 cents in the dollar) constitutes a material change in circumstances. The creditors' vote in favor of the DCA was significantly influenced by those potentially subject to recovery actions, reducing its weight. To avoid oppression and unfair prejudice to ordinary creditors, and to permit the pursuit of recovery actions with new funding, the DCA must be terminated and the company wound up.

Jurisdiction
Australia
Judgment Date
31 January 2001
Procedural Posture
Application to Set Aside Deed of Company Arrangement / First Instance Judgment
Outcome
Deed of Company Arrangement terminated; company wound up in insolvency; orders for costs as specified; further orders and notes as to payments to creditors and funding.
Legal Topics
['deed of Company Arrangement' "creditors' Vote" 'winding Up in Insolvency' 'litigation Funding' 'section 445 D Corporations Law']
['corporations'] ['deed of Company Arrangement' "creditors' Vote" 'winding Up in Insolvency' 'litigation Funding' 'section 445 D Corporations Law']

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 to Set Aside Deed of Company Arrangement / First Instance Judgment

Legal Issues

  1. 1 ['Whether the Deed of Company Arrangement (DCA) should be terminated under s445D of the Corporations Law' 'Effect of subsequent events (litigation funding and creditor payment offers) on the appropriateness of the DCA' 'Significance of creditor voting when influenced by potentially interested parties']

Ratio Decidendi

The Deed of Company Arrangement (DCA) should be terminated under s445D(1)(f)(ii) of the Corporations Law because the availability of new litigation funding and a higher, guaranteed payment to creditors (5.5 cents in the dollar) constitutes a material change in circumstances. The creditors' vote in favor of the DCA was significantly influenced by those potentially subject to recovery actions, reducing its weight. To avoid oppression and unfair prejudice to ordinary creditors, and to permit the pursuit of recovery actions with new funding, the DCA must be terminated and the company wound up.

Court Disposition

Deed of Company Arrangement terminated; company wound up in insolvency; orders for costs as specified; further orders and notes as to payments to creditors and funding.

Orders

  • ['The Deed of Company Arrangement between the First and Second Defendants dated 18 July 2000 be terminated pursuant to s445D of the Corporations Law.' 'The First Defendant be wound up in insolvency and that John Vouris of Vouris & Bell, be appointed liquidator of the First Defendant.' "Plaintiff's costs of these...