McMahon & Ors v McGrath & Ors

McMahon & Ors v McGrath & Ors

The English court cannot direct or authorise the English liquidators to remit assets collected in England to the Australian liquidators for distribution under Australian law where section 562A materially alters the distribution regime; assets must be distributed in accordance with English insolvency law unless they can be distributed as if in an English liquidation. Hotchpot applies to dividends received in the Australian liquidation. Section 426 does not permit transfer contrary to English statutory scheme, and provisional liquidation does not justify transfer where winding-up orders are likely.

Parties
Applicant: Anthony James McMahon; Applicant: Thomas Alexander Riddell; Applicant: John Mitchell Wardrop; Respondent: Anthony McGrath; Respondent: Christopher Honey; Respondent: Amaca Pty Limited; Respondent: Amaba Pty Limited
Jurisdiction
England and Wales
Judgment Date
07 October 2005
Procedural Posture
Insolvency Directions Application / Judgment
Outcome
Applications for directions to remit assets to Australian liquidators refused; assets to be distributed in accordance with English insolvency law.
Legal Topics
Ancillary Liquidation, Pari Passu Distribution, Hotchpot, Scheme of Arrangement, Preferential Creditors, Distribution of Assets, Section 426 Assistance, Insurance Company Insolvency
Insolvency Cross Border Insolvency Company Law Ancillary Liquidation Pari Passu Distribution Hotchpot Scheme of Arrangement Preferential Creditors +3 more

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Parties

Anthony James McMahon

Applicant

Thomas Alexander Riddell

Applicant

John Mitchell Wardrop

Applicant

Anthony McGrath

Respondent

Christopher Honey

Respondent

Amaca Pty Limited

Respondent

Amaba Pty Limited

Respondent

Procedural Posture

Insolvency Directions Application / Judgment

Legal Issues

  1. 1 Whether English court can direct English liquidator to remit assets to Australian liquidator for distribution under Australian law where distribution regime differs materially from English law
  2. 2 Whether hotchpot applies to distributions received by creditors under Australian liquidation
  3. 3 Effect of section 426 Insolvency Act 1986 and letters of request from Australian court

Ratio Decidendi

The English court cannot direct or authorise the English liquidators to remit assets collected in England to the Australian liquidators for distribution under Australian law where section 562A materially alters the distribution regime; assets must be distributed in accordance with English insolvency law unless they can be distributed as if in an English liquidation. Hotchpot applies to dividends received in the Australian liquidation. Section 426 does not permit transfer contrary to English statutory scheme, and provisional liquidation does not justify transfer where winding-up orders are likely.

Court Disposition

Applications for directions to remit assets to Australian liquidators refused; assets to be distributed in accordance with English insolvency law.

Orders

  • JPLs not directed to pay over sums collected to Australian liquidators.
  • JPLs' powers not extended to enable such payment.