GRAHAM v ARENA CAPITAL LIMITED (IN LIQ) [2017] NZHC 973

GRAHAM v ARENA CAPITAL LIMITED (IN LIQ) [2017] NZHC 973

Court directed that all recovered assets of Arena (after costs) form a single common pool available to both general unsecured creditors and investors, to be distributed pro rata pari passu calculated on a net contribution basis (total paid in by each investor less total paid out to that investor as at liquidation); liquidators may deduct costs of recovery and distribution from the common pool; creditors and investors must lodge claims in substantially Form 1 and the relevant Companies Act provisions and Regulations apply.

Citation
[2017] NZHC 973
Parties
Plaintiffs (liquidators): Grant Robert Graham and Neale Jackson (liquidators); Defendant (in Liquidation): Arena Capital Limited (in liquidation)
Court
High Court
Jurisdiction
New Zealand
Judgment Date
12 May 2017
Procedural Posture
Company Liquidation — Directions Application Under Companies Act 1993 / Directions Hearing — High Court Judgment
Outcome
Directions granted in part: orders made as sought by liquidators with leave to apply for further directions reserved
Legal Topics
Pooling of Assets, Pari Passu Distribution, Tracing, Voidable Transactions, Liquidators' Remuneration, Proofs of Debt
Company Law Insolvency Trusts and Equity Civil Procedure Pooling of Assets Pari Passu Distribution Tracing Voidable Transactions +2 more

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Parties

Grant Robert Graham and Neale Jackson (liquidators)

Plaintiffs (liquidators)

Arena Capital Limited (in liquidation)

Defendant (in Liquidation)

Procedural Posture

Company Liquidation — Directions Application Under Companies Act 1993 / Directions Hearing — High Court Judgment

Legal Issues

  1. 1 Whether recovered assets should form one common pool for investors and general unsecured creditors
  2. 2 Whether distribution should be pro rata pari passu or by tracing/FIFO (Clayton's Case)
  3. 3 Appropriate methodology to calculate investor entitlements (net contribution v alternative)

Ratio Decidendi

Court directed that all recovered assets of Arena (after costs) form a single common pool available to both general unsecured creditors and investors, to be distributed pro rata pari passu calculated on a net contribution basis (total paid in by each investor less total paid out to that investor as at liquidation); liquidators may deduct costs of recovery and distribution from the common pool; creditors and investors must lodge claims in substantially Form 1 and the relevant Companies Act provisions and Regulations apply.

Court Disposition

Directions granted in part: orders made as sought by liquidators with leave to apply for further directions reserved

Orders

  • All recovered assets of Arena, after costs, are to be treated as forming one common pool of assets for distribution available to both general unsecured creditors and investors in Arena.
  • The common pool of assets is to be distributed on a pro rata, pari passu basis among general unsecured creditors and investors.