MARSH V COMMONWEALTH BANK OF AUSTRALIA, NEW ZEALAND BRANCH (ABN 123 123 124) HC AK CIV2009-404-3336

MARSH V COMMONWEALTH BANK OF AUSTRALIA, NEW ZEALAND BRANCH (ABN 123 123 124) HC AK CIV2009-404-3336

Although the proposals met procedural voting requirements and were not unreasonable under s333(3)(b), the Court refused approval under s333(3)(c) because the insolvents' conduct (frustration of security realisation), lack of candour, failure to explain massive losses and the proposals' structure excluding income from secured‑creditor dealings from distributable funds created a real public‑interest risk they would evade bankruptcy consequences and capture substantial benefits to the detriment of creditors and the integrity of the insolvency regime.

Citation
openlaw-894922dd_34b4_4795_bcb5_b54d929a8fa7.pdf
Parties
Insolvent: Cameron John McLaren Marsh; Insolvent: Mark Francis Perriam; Creditor: Commonwealth Bank of Australia, New Zealand Branch (ABN 123 123 124)
Court
High Court
Jurisdiction
New Zealand
Judgment Date
16 March 2010
Procedural Posture
Application for Court Approval of Proposals Under Part 5 of the Insolvency Act 2006 / Post‑creditors' Meeting Application to Court for Approval; Judgment on Approval Applications Delivered
Outcome
Applications to approve the proposals refused
Legal Topics
Proposal Approval Under S333, Reasonableness of Compromise, Expediency/public Interest, Treatment of Secured Creditors, Directors' Conduct
Insolvency Bankruptcy Commercial Law Corporate Governance Proposal Approval Under S333 Reasonableness of Compromise Expediency/public Interest Treatment of Secured Creditors +1 more

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Parties

Cameron John McLaren Marsh

Insolvent

Mark Francis Perriam

Insolvent

Commonwealth Bank of Australia, New Zealand Branch (ABN 123 123 124)

Creditor

Procedural Posture

Application for Court Approval of Proposals Under Part 5 of the Insolvency Act 2006 / Post‑creditors' Meeting Application to Court for Approval; Judgment on Approval Applications Delivered

Legal Issues

  1. 1 Whether the proposals are reasonable and calculated to benefit the general body of creditors under s333(3)(b)
  2. 2 Whether it is inexpedient in the public interest to approve the proposals under s333(3)(c) due to the insolvents' conduct and lack of candour
  3. 3 Whether creditors would receive a better return in bankruptcy

Ratio Decidendi

Although the proposals met procedural voting requirements and were not unreasonable under s333(3)(b), the Court refused approval under s333(3)(c) because the insolvents' conduct (frustration of security realisation), lack of candour, failure to explain massive losses and the proposals' structure excluding income from secured‑creditor dealings from distributable funds created a real public‑interest risk they would evade bankruptcy consequences and capture substantial benefits to the detriment of creditors and the integrity of the insolvency regime.

Court Disposition

Applications to approve the proposals refused

Orders

  • Applications to approve the proposals are refused
  • Commonwealth Bank's adjudication applications adjourned for call at 10:00am on 20 April 2010