In the matter of BBY Limited (Receivers & Managers Appointed) (in Liquidation) [2019] NSWSC 1271

In the matter of BBY Limited (Receivers & Managers Appointed) (in Liquidation) [2019] NSWSC 1271

The preponderance of contemporaneous emails, bank records and GARF Pty Limited's admissions established on the balance of probabilities that the true loan was from GARF Pty Limited to BBY, not to BBY Staff Holdings Pty Limited, so GARF was a creditor and BBY and GARF were parties to the repayment transaction. The repayment of the unsecured $2.5 million debt gave GARF more than it would receive if the transaction were set aside and it proved in BBY's winding up, because BBY's unsecured creditors were unlikely to be paid in full or at all. The Court accepted the liquidator's evidence that BBY was insolvent at all times between 1 January 2014 and 17 May 2015, including on 24 June 2014. As...

Jurisdiction
Australia
Judgment Date
01 May 2019
Procedural Posture
Corporations Winding Up Application Concerning Voidable Transaction, Insolvent Transaction and Unfair Preference / Ex Tempore Principal Judgment on Liquidators' Application for Orders Under Section 588 Ff(1)(a) of the Corporations Act 2001 (cth)
Outcome
Transaction avoided; orders made requiring GARF Pty Limited to pay BBY Limited $2,500,000 with interest and costs.
Legal Topics
['winding Up' 'voidable Transactions' 'insolvent Transactions' 'unfair Preferences' 'related Entity Transactions' 'proof of Insolvency' 'identification of Creditor']
['corporations' 'insolvency' 'civil Procedure'] ['winding Up' 'voidable Transactions' 'insolvent Transactions' 'unfair Preferences' 'related Entity Transactions' 'proof of Insolvency' 'identification of Creditor']

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

Corporations Winding Up Application Concerning Voidable Transaction, Insolvent Transaction and Unfair Preference / Ex Tempore Principal Judgment on Liquidators' Application for Orders Under Section 588 Ff(1)(a) of the Corporations Act 2001 (cth)

Legal Issues

  1. 1 ['Whether the repayment of $2.5 million by BBY to GARF Pty Limited was an unfair preference given by BBY to a creditor of the company.' 'Whether GARF Pty Limited was a creditor of BBY, despite an Unsecured Loan Agreement naming BBY Staff Holdings Pty Limited as borrower.' 'Whether BBY was insolvent at the time of the repayment on 24 June 2014.' 'Whether the transaction was voidable under section 588FE(4) of the Corporations Act 2001 (Cth).']

Ratio Decidendi

The preponderance of contemporaneous emails, bank records and GARF Pty Limited's admissions established on the balance of probabilities that the true loan was from GARF Pty Limited to BBY, not to BBY Staff Holdings Pty Limited, so GARF was a creditor and BBY and GARF were parties to the repayment transaction. The repayment of the unsecured $2.5 million debt gave GARF more than it would receive if the transaction were set aside and it proved in BBY's winding up, because BBY's unsecured creditors were unlikely to be paid in full or at all. The Court accepted the liquidator's evidence that BBY was insolvent at all times between 1 January 2014 and 17 May 2015, including on 24 June 2014. As...

Court Disposition

Transaction avoided; orders made requiring GARF Pty Limited to pay BBY Limited $2,500,000 with interest and costs.

Orders

  • ['Pursuant to section 588FF(1)(a) of the Corporations Act 2001 (Cth), GARF Pty Limited pay BBY Limited (Receivers and Managers appointed) (in liquidation) the sum of $2,500,000 together with interest pursuant to section 100 of the Civil Procedure Act 2005 (NSW).' "GARF Pty Limited pay the plaintiffs' costs of the...