Irving v Smith [2008] FCA 1391

FEDERAL COURT OF AUSTRALIA

Irving v Smith [2008] FCA 1391 CORPORATIONS – deed of company arrangement executed pursuant to resolution of creditors – appeal from decision of chair of creditors' meeting to accept proofs of debt where assignments of debts took place after meeting was convened – where result of assignment was a larger number of creditors entitled to vote at the meeting and resolution on deed of company arrangement was passed with the support of those creditors – whether debts were split as a result of assignments – whether there is a cut off time for lodgment of proofs of debt at the point where the notices convening the meeting were sent – whether assignments bona fide – whether deed of company arrangement should be terminated. Held: Debts not split – nothing in Corporations Act 2001 (Cth) Pt 5.3A that supports the proposition that there is a cut off time for determining who is a creditor at the point where notices convening the meeting are sent – assignments bona fide – application for termination of deed of company arrangement refused. CORPORATIONS – whether the deed of company arrangement was oppressive or unfairly prejudicial towards or unfairly discriminatory against one or more creditors – where administrators advised that deed did not "clearly" provide a better return for all classes of creditors – whether effect of deed was unfair or inequitable in the impact it had upon one or more of the creditors – where creditors by a majority of number and value chose to pursue a deed of company arrangement rather than liquidation. Held: Administrators' report presented a clear choice to creditors, indicating assumptions made and variable factors including the advantages and disadvantages of liquidation – assumptions and factors required creditors to make a choice – the choice did not result in a deed that was oppressive, unfairly prejudicial or unfairly discriminatory towards the general body of creditors including the plaintiff – contention that effect could not be given to the deed without injustice rejected. Corporations Act 2001 (Cth): ss 436C(1), 436E, 439A, 445D(1), Pt 5.3A Corporations Regulations: reg 5.6.23