Grocon Constructors Pty Ltd v Kimberley Securities Ltd [2009] NSWSC 541

Grocon Constructors Pty Ltd v Kimberley Securities Ltd [2009] NSWSC 541

The court held that the resolution for the deed of company arrangement was passed due to the votes of related creditors and nominees acting at the direction of company officers, achieved through a deliberate scheme to procure and allocate voting power. This caused unreasonable prejudice to the non-assenting creditors, whose wishes and financial interests were subordinated to those of the related creditors who orchestrated the deed. The circumstances satisfied s 600A(1)(a)-(c), warranting an order setting aside the resolution, terminating the deed of company arrangement, and ordering that the company be wound up as it was insolvent.

Parties
Plaintiff: Grocon Constructors Pty Limited; First Defendant: Kimberley Securities Limited (Administrators Appointed); Second Defendant: John Vouris; Third Defendant: Warren Pantzer; Fourth Defendant: Lohemi Pty Limited; Fifth Defendant: Gabriel Michael Lorentz; Sixth Defendant: Nathan Stoliar; Supporting Creditor: Building Insurers' Guarantee Corporation
Jurisdiction
Australia
Judgment Date
16 June 2009
Procedural Posture
Corporations – Voluntary Administration/doca Challenge / Final Judgment (orders on Challenge to Creditors’ Resolution, Deed of Company Arrangement and Winding Up)
Outcome
Resolution for deed of company arrangement set aside; deed terminated; company to be wound up.
Legal Topics
Voluntary Administration, Deed of Company Arrangement, Creditors' Resolutions, Related Party Voting, Winding Up, Section 600 a Corporations Act, Prejudice to Creditors
Corporations Law Equity Voluntary Administration Deed of Company Arrangement Creditors' Resolutions Related Party Voting Winding Up Section 600 a Corporations Act +1 more

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Parties

Grocon Constructors Pty Limited

Plaintiff

Kimberley Securities Limited (Administrators Appointed)

First Defendant

John Vouris

Second Defendant

Warren Pantzer

Third Defendant

Lohemi Pty Limited

Fourth Defendant

Gabriel Michael Lorentz

Fifth Defendant

Nathan Stoliar

Sixth Defendant

Building Insurers' Guarantee Corporation

Supporting Creditor

Procedural Posture

Corporations – Voluntary Administration/doca Challenge / Final Judgment (orders on Challenge to Creditors’ Resolution, Deed of Company Arrangement and Winding Up)

Legal Issues

  1. 1 Whether resolution approving a deed of company arrangement should be set aside under s 600A of the Corporations Act 2001 (Cth) due to related party voting and unreasonable prejudice to non-assenting creditors.
  2. 2 Whether the deed of company arrangement should be terminated and the company wound up.

Ratio Decidendi

The court held that the resolution for the deed of company arrangement was passed due to the votes of related creditors and nominees acting at the direction of company officers, achieved through a deliberate scheme to procure and allocate voting power. This caused unreasonable prejudice to the non-assenting creditors, whose wishes and financial interests were subordinated to those of the related creditors who orchestrated the deed. The circumstances satisfied s 600A(1)(a)-(c), warranting an order setting aside the resolution, terminating the deed of company arrangement, and ordering that the company be wound up as it was insolvent.

Court Disposition

Resolution for deed of company arrangement set aside; deed terminated; company to be wound up.

Orders

  • Order setting aside the 30 March 2009 creditors’ resolution to execute the deed of company arrangement under s 600A(2)(a).
  • Order terminating the deed of company arrangement under s 600A(2)(d) and/or s 445D.