In the matter of Gearhouse BSI Pty Ltd [2021] NSWSC 98

In the matter of Gearhouse BSI Pty Ltd [2021] NSWSC 98

Given the insoluble deadlock between shareholders, justified loss of trust in management, and practical failure of business substratum after the expiry of the TPSA (the only business conducted), it is just and equitable under s 461(1)(k) Corporations Act 2001 (Cth) to wind up Gearhouse BSI Pty Ltd. The dispute resolution process in the Shareholders Agreement does not preclude winding up proceedings, and no alternative remedy is appropriate or available to redress the breakdown. The Shareholders Agreement is terminated by the making of the winding up order under clause 23.2(c), enlivening BSI’s right under clause 5.9(a).

Parties
Plaintiff: Broadcast Sports International, LLC; First Defendant: Gearhouse BSI Pty Ltd (ACN 610 164 102); Second Defendant: Gravity Media (Australia) Pty Ltd
Jurisdiction
Australia
Judgment Date
17 February 2021
Procedural Posture
Originating Process and Interlocutory Process / Final Hearing; Judgment on Winding Up Application and Related Interim and Final Relief
Outcome
Application for stay refused. Application for winding up granted. Declaration made as to termination of the Shareholders Agreement upon winding up and BSI’s buy-back option.
Legal Topics
Winding Up on Just and Equitable Ground, Deadlock Between Shareholders, Corporations Act 2001 (cth) S 461(1)(k), Shareholders Agreements (construction and Termination), Powers of Court in Winding Up, Alternative Remedies to Winding Up
Corporations Law Equity Winding Up on Just and Equitable Ground Deadlock Between Shareholders Corporations Act 2001 (cth) S 461(1)(k) Shareholders Agreements (construction and Termination) Powers of Court in Winding Up Alternative Remedies to Winding Up

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Parties

Broadcast Sports International, LLC

Plaintiff

Gearhouse BSI Pty Ltd (ACN 610 164 102)

First Defendant

Gravity Media (Australia) Pty Ltd

Second Defendant

Procedural Posture

Originating Process and Interlocutory Process / Final Hearing; Judgment on Winding Up Application and Related Interim and Final Relief

Legal Issues

  1. 1 Whether Gearhouse BSI Pty Ltd should be wound up on the just and equitable ground under s 461(1)(k) of the Corporations Act 2001 (Cth)
  2. 2 Whether the Shareholders Agreement is terminated upon winding up and BSI’s buy-back rights triggered
  3. 3 Whether the dispute resolution processes in the Shareholders Agreement require a stay of the winding up proceeding

Ratio Decidendi

Given the insoluble deadlock between shareholders, justified loss of trust in management, and practical failure of business substratum after the expiry of the TPSA (the only business conducted), it is just and equitable under s 461(1)(k) Corporations Act 2001 (Cth) to wind up Gearhouse BSI Pty Ltd. The dispute resolution process in the Shareholders Agreement does not preclude winding up proceedings, and no alternative remedy is appropriate or available to redress the breakdown. The Shareholders Agreement is terminated by the making of the winding up order under clause 23.2(c), enlivening BSI’s right under clause 5.9(a).

Court Disposition

Application for stay refused. Application for winding up granted. Declaration made as to termination of the Shareholders Agreement upon winding up and BSI’s buy-back option.

Orders

  • Dismiss prayers 5 and 6 of the Interlocutory Process filed 9 February 2021.
  • Order under s 461(1)(k) Corporations Act 2001 (Cth) that Gearhouse BSI Pty Limited (ACN 610 164 102) be wound up.