GDK Projects Pty Ltd, in the matter of Umberto Pty Ltd (in liq) v Umberto Pty Ltd (in liq) [2018] FCA 541

GDK Projects Pty Ltd, in the matter of Umberto Pty Ltd (in liq) v Umberto Pty Ltd (in liq) [2018] FCA 541

The Court held that it would be just and of utility to appoint special purpose liquidators to investigate and pursue potential claims on behalf of Umberto Pty Ltd (in liq) given the interests of creditors, lack of funding or independence in the current administration, and the urgency imposed by limitation periods. The funding and costs agreements, as revised to address concerns about independence, did not give rise to impropriety or oppress creditors, and their approval was therefore proper under s 477(2B) of the Corporations Act 2001 (Cth).

Parties
Plaintiff: GDK Projects Pty Ltd; First Defendant: Umberto Pty Ltd (in liquidation); Second Defendant: Mr David Iannuzzi as Liquidator of Umberto Pty Ltd (in liquidation)
Jurisdiction
Australia
Judgment Date
20 April 2018
Procedural Posture
Corporations Winding Up (creditors' Voluntary) / Application for Appointment of Special Purpose Liquidators and Approval of Funding and Costs Agreements
Outcome
Applications granted. Special purpose liquidators appointed. Approval granted for entry into funding and costs agreements. Orders for confidentiality and costs made as detailed in the judgment.
Legal Topics
Appointment of Liquidators, Approval of Funding Agreements, Creditors' Voluntary Winding Up, Confidentiality Orders, Breach of Directors' Duties
Corporations Law Insolvency Litigation Funding Appointment of Liquidators Approval of Funding Agreements Creditors' Voluntary Winding Up Confidentiality Orders Breach of Directors' Duties

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Parties

GDK Projects Pty Ltd

Plaintiff

Umberto Pty Ltd (in liquidation)

First Defendant

Mr David Iannuzzi as Liquidator of Umberto Pty Ltd (in liquidation)

Second Defendant

Procedural Posture

Corporations Winding Up (creditors' Voluntary) / Application for Appointment of Special Purpose Liquidators and Approval of Funding and Costs Agreements

Legal Issues

  1. 1 Whether special purpose liquidators should be appointed under s 90-15 of Div 90 of Sch 2 to the Corporations Act 2001 (Cth).
  2. 2 Whether approval should be given under s 477(2B) of the Corporations Act 2001 (Cth) to the special purpose liquidators to enter into a funding and costs agreement.
  3. 3 Whether such arrangements preserve the independence of liquidators and are in creditors' interests.

Ratio Decidendi

The Court held that it would be just and of utility to appoint special purpose liquidators to investigate and pursue potential claims on behalf of Umberto Pty Ltd (in liq) given the interests of creditors, lack of funding or independence in the current administration, and the urgency imposed by limitation periods. The funding and costs agreements, as revised to address concerns about independence, did not give rise to impropriety or oppress creditors, and their approval was therefore proper under s 477(2B) of the Corporations Act 2001 (Cth).

Court Disposition

Applications granted. Special purpose liquidators appointed. Approval granted for entry into funding and costs agreements. Orders for confidentiality and costs made as detailed in the judgment.

Orders

  • Amanda Young and Sule Arnautovic appointed as special purpose liquidators for the purposes set out in the orders.
  • Approval granted under s 477(2B) Corporations Act 2001 (Cth) for entry into funding agreement with Nevrast Pty Ltd and GDK Projects Pty Ltd and costs agreement with ERA Legal.