Ford Kinter & Associates Pty Ltd, in the matter of Reliance Franchise Partners Pty Ltd (in liq) v Reliance Franchise Partners Pty Ltd (in liq) (No 2) [2025] FCA 139

Ford Kinter & Associates Pty Ltd, in the matter of Reliance Franchise Partners Pty Ltd (in liq) v Reliance Franchise Partners Pty Ltd (in liq) (No 2) [2025] FCA 139

Ford Kinter took substantial risk in providing indispensable funding as the only unrelated creditor, enabling successful recovery for the benefit of the liquidation. The factors under s 564 and relevant case law favour granting full priority for its debt and costs, as the impact on other creditors is limited, substantial recovery was achieved, and public interest in funding liquidators is served.

Parties
Plaintiff: Ford Kinter & Associates Pty Ltd; First Defendant: Reliance Franchise Partners Pty Ltd (in liquidation); Second and Third Defendants: Gideon Isaac Rathner and Matthew Brian Sweeny in their capacity as joint and several liquidators of Reliance Franchise Partners Pty Ltd (in liquidation); Fourth Defendant: Fopar Nominees Pty Ltd; Fifth Defendant: Vantage Holdings Group Pty Ltd; Sixth Defendant: Caviar Pty Ltd (as absolute assignee of the debt of AR Portfolio (NSW) Pty Ltd)
Jurisdiction
Australia
Judgment Date
20 February 2025
Procedural Posture
Corporations—insolvency (application Under S 564 for Priority Repayment to Unsecured Creditor) / Final Judgment—orders Following Unopposed Application at First Instance
Outcome
Application granted—priority repayment order in favour of Ford Kinter for its full proof of debt and application costs under s 564 of the Corporations Act.
Legal Topics
Priority of Creditors, Creditor Funding of Liquidators, Section 564 Corporations Act Applications, Litigation Funding in Liquidation, Distribution of Insolvent Property
Corporations Law Insolvency and Liquidation Priority of Creditors Creditor Funding of Liquidators Section 564 Corporations Act Applications Litigation Funding in Liquidation Distribution of Insolvent Property

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Parties

Ford Kinter & Associates Pty Ltd

Plaintiff

Reliance Franchise Partners Pty Ltd (in liquidation)

First Defendant

Gideon Isaac Rathner and Matthew Brian Sweeny in their capacity as joint and several liquidators of Reliance Franchise Partners Pty Ltd (in liquidation)

Second and Third Defendants

Fopar Nominees Pty Ltd

Fourth Defendant

Vantage Holdings Group Pty Ltd

Fifth Defendant

Caviar Pty Ltd (as absolute assignee of the debt of AR Portfolio (NSW) Pty Ltd)

Sixth Defendant

Procedural Posture

Corporations—insolvency (application Under S 564 for Priority Repayment to Unsecured Creditor) / Final Judgment—orders Following Unopposed Application at First Instance

Legal Issues

  1. 1 Whether an unsecured creditor who funded litigation in a liquidation should have priority in repayment under s 564 of the Corporations Act 2001 (Cth)
  2. 2 Whether the discretionary factors justify disturbing the standard order of distribution to grant priority to Ford Kinter
  3. 3 Whether giving Ford Kinter priority would unduly prejudice other creditors given the facts

Ratio Decidendi

Ford Kinter took substantial risk in providing indispensable funding as the only unrelated creditor, enabling successful recovery for the benefit of the liquidation. The factors under s 564 and relevant case law favour granting full priority for its debt and costs, as the impact on other creditors is limited, substantial recovery was achieved, and public interest in funding liquidators is served.

Court Disposition

Application granted—priority repayment order in favour of Ford Kinter for its full proof of debt and application costs under s 564 of the Corporations Act.

Orders

  • Pursuant to s 564 of the Corporations Act 2001 (Cth), the property of Reliance Franchise Partners Pty Ltd (in liquidation) is to be distributed by its liquidators in the following priority: (a) payment of claims under s 556(1) remaining unsatisfied; (b) payment to Ford Kinter & Associates Pty Ltd of $1,552,289.56,...
  • Ford Kinter & Associates Pty Ltd's costs of this application, including reserved costs, to be paid out of the property of Reliance Franchise Partners Pty Ltd (in liquidation) with the same priority as the amount in paragraph 1(b).