In the matter of Property Builders (Constructions) Pty Ltd (In Liquidation) [2013] NSWSC 711

In the matter of Property Builders (Constructions) Pty Ltd (In Liquidation) [2013] NSWSC 711

The Settlement Deed required Court approval because performance of obligations under it would extend beyond three months. Approval and authorisation were warranted because the company's cross-claim was its only significant asset, the company lacked funds to prosecute it, the liquidator supported the arrangement and considered his and the company's positions sufficiently protected, legal advice indicated the cross-claims were strong and had good prospects of success, arm's length litigation funding was difficult to obtain, the funding creditors provided indemnities and security, and the orders were in the interests of the company and its general creditors.

Jurisdiction
Australia
Judgment Date
24 May 2013
Procedural Posture
Corporations Application Concerning Approval of Liquidator's Agreement and Authorisation for Creditor to Carry on Company Proceedings / Ex Tempore Judgment on Further Amended Interlocutory Process Filed 10 May 2013
Outcome
Settlement Deed approved; Elli Phontos authorised to carry on the company's cross-claim and defend claims against the company; further Amended Interlocutory Process otherwise dismissed; no order as to costs; proceedings stood over for directions.
Legal Topics
['liquidator Powers' 'court Approval Under S 477(2 B)' 'creditor Funding of Litigation by Company in Liquidation' 'use of Company Name in Proceedings' 'indemnity and Security for Costs']
['corporations' 'insolvency' 'civil Procedure'] ['liquidator Powers' 'court Approval Under S 477(2 B)' 'creditor Funding of Litigation by Company in Liquidation' 'use of Company Name in Proceedings' 'indemnity and Security for Costs']

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Procedural Posture

Corporations Application Concerning Approval of Liquidator's Agreement and Authorisation for Creditor to Carry on Company Proceedings / Ex Tempore Judgment on Further Amended Interlocutory Process Filed 10 May 2013

Legal Issues

  1. 1 ['Whether the Court should approve under s 477(2B) of the Corporations Act 2001 (Cth) the Settlement Deed entered into by the liquidator where obligations may be discharged more than three months after entry into the agreement.' "Whether Elli Phontos should be authorised under s 477(6) of the Corporations Act 2001 (Cth), alternatively the Court's inherent jurisdiction, to carry on the company's cross-claim and defend claims against the company." 'Whether the proposed arrangements were in the interests of the company and its general body of creditors.']

Ratio Decidendi

The Settlement Deed required Court approval because performance of obligations under it would extend beyond three months. Approval and authorisation were warranted because the company's cross-claim was its only significant asset, the company lacked funds to prosecute it, the liquidator supported the arrangement and considered his and the company's positions sufficiently protected, legal advice indicated the cross-claims were strong and had good prospects of success, arm's length litigation funding was difficult to obtain, the funding creditors provided indemnities and security, and the orders were in the interests of the company and its general creditors.

Court Disposition

Settlement Deed approved; Elli Phontos authorised to carry on the company's cross-claim and defend claims against the company; further Amended Interlocutory Process otherwise dismissed; no order as to costs; proceedings stood over for directions.

Orders

  • ['Under s 477 (2B) of the Corporations Act 2001 (Cth) the entry into of the Settlement Deed on 23 May 2013 between Neil Robert Cussen in his capacity as the liquidator of Property Builders (Constructions) Pty Limited (in liquidation) (ACN 089 023 423), Elli Phontos, Michael Phontos and DR Formwork Pty Limited is...