Canstruct Pty Ltd v Project Sea Dragon Pty Ltd (Subject to a Deed of Company Arrangement) (No 4) [2024] FCA 112

Federal Court of Australia

Canstruct Pty Ltd v Project Sea Dragon Pty Ltd (Subject to a Deed of Company Arrangement) (No 4) [2024] FCA 112 File number: QUD 124 of 2023

Judgment of: DERRINGTON J

Date of judgment: 22 February 2024

Catchwords: CORPORATIONS – voluntary administration – deed of company arrangement – application to terminate deed of company arrangement and administration pursuant to s 445D(1) and s 447A of the Corporations Act 2001 (Cth) – where utilisation of the voluntary administration process and entry into the deed of company arrangement amounted to an abuse of the provisions of Pt 5.3A of the Corporations Act 2001 (Cth) – where process utilised to avoid an unwanted debt – where process had the consequence of avoiding scrutiny of whether the company had engaged in insolvent trading – where deed was unfairly prejudicial and unfairly discriminatory against a major creditor – where effect could not be given to the deed without injustice – where misleading information was provided to creditors voting on the deed – where there were material omissions from the information given to those creditors – application granted CORPORATIONS – insolvency – whether company was insolvent whilst carrying on its business – where company had no income stream or substantial assets of its own – where company funded predominantly by its parent company – whether the availability and provision of funds from the parent company prevented the company's insolvency – whether the funds were genuinely and realistically available as a matter of commercial reality – where there was no agreement, commitment, assurance, or letter of comfort from the parent company in relation to funding – where the funds were not advanced on deferred terms – company found to be insolvent