developments in deeds of company arrangement - DibbsBarker

More documents

Recommendations

Info

(a)created a trust whereby the Deed Administrator held funds for either theCompany or Deed Creditors; and(b)should be terminated and the company wound up thus allowing the liquidatorto perform his duties.DecisionThe Court held that the DOCA could be terminated and winding-up commenced, as theDOCA could no longer assist unpaid creditors.The Court noted that section 471A of the Corporations Act prevents officers of acompany from exercising their powers following the appointment of a liquidator. Thismeant that the Deed Administrator (who was an officer of the company) was unable toexercise their powers under the DOCA. Ownership of the company’s assets passed ontothe liquidator.It followed that in a case such as the one before the Court where a company is underadministration subject to a continuing DOCA, after a Liquidator is appointed, the DeedAdministrator ceased to be able to perform any function or power under the DOCA, butthat at the same time, the creditors were bound by the DOCA.The Court then considered whether or not the Liquidator was required to apply the assetsof the company in accordance with the DOCA, or on accordance with the statutoryprovisions relating to liquidation.11899717 v1 Brisbane 05 08 0912
If the administrator were required to comply with the statutory liquidation provisions, theCourt would need to make an order terminating the DOCA, so as to remove theLiquidator from any scenario involving a conflict of duties.The Court concluded after an examination of the case law in the area that the DOCA didnot impress a trust upon the Deed Administrator to hold property on behalf of DeedCreditors. The Court held 13 (at [48]):“There is no reason to impress upon the administrator a trust so that the company isdivested of its assets upon the execution of the deed of company arrangement. It is enoughthat the administrator is obliged to deal with the assets of the company in accordancewith the directions given by the company by its execution of the deed of companyarrangement. …. There is nothing in the statute which suggests that an administrator is tobecome the trustee of any fund created by the company pursuant to a deed of companyarrangement. There is nothing to suggest that the administrator should occupy anydifferent position to a liquidator. The purpose of an administration is to get in theavailable assets and distribute them to the creditors; in the case of an administrator inaccordance with the deed of company arrangement and in the case of a liquidator inaccordance with the statutory scheme.”Given the finding that the Deed Administrator was not impressed with a trust in favour ofthe creditors, the Court found that the Deed Administrator had no further work to do, andcould not assist the unpaid creditors. The Court resolved that it was in the best interests ofall parties to terminate the DOCA under section 445D of the Corporations Act and permitthe Liquidator to wind up the company pursuant to the statutory scheme.13 At para [48].11899717 v1 Brisbane 05 08 0913
Page 1 and 2: DEVELOPMENTS IN DEEDS OF COMPANYARR
Page 3 and 4: DEVELOPMENTS IN DEEDS OF COMPANY AR
Page 5 and 6: inevitable disadvantage of potentia
Page 7 and 8: IssueThe Court was asked to decide
Page 9 and 10: The Administrators argued that even
Page 11: 3.3 Liquidation as an event termina
Page 15 and 16: DecisionThe Court found that the DO
Page 17 and 18: ecommended that Storm be wound up.
Page 19: 4.3 Opting for a DOCA instead of wi
Page 22 and 23: Courts have shown a willingness to

developments in deeds of company arrangement - DibbsBarker

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?