New South Wales Supreme Court CITATION : Re SC Aust (In Liq) & SC Equipment (In Liq) [1999] NSWSC 176 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 1393/99 HEARING DATE(S) : 1 March 1999 JUDGMENT DATE : 1 March 1999 PARTIES : Peter Murray Walker & Anor (Application of) (in their capacity as liquidators of SC Australia Pty Ltd (Liq) and SC Equipment P/L (Liq) & Anor JUDGMENT OF : Austin J COUNSEL : M Chapple (Solicitor) (P) SOLICITORS : Baker & McKenzie (P) CATCHWORDS : Corporation - company - deregistration after winding up - Court's power to specify deregistration day - relevant cirteria DECISION : Order made specifying winding up day THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J MONDAY 1 MARCH 1999 1393/00 - PETER MURRAY WALKER & ANOR (APPLICATION OF) (IN THEIR CAPACITY AS LIQUIDATORS OF SC AUST PTY LTD (LIQ) & SC EQUIPMENT P/L (LIQ) & ANOR JUDGMENT (EX TEMPORE) 1 HIS HONOUR: This is an application by the liquidators of two companies, namely SC Australia Pty Ltd (in liquidation) ("SCA") and SC Equipment Pty Ltd (in liquidation) ("SCE"). The liquidators seek orders under s 409(6) of the Corporations Law that SCA and SCE be deregistered by the Australian Securities and Investments Commission ("ASIC") one week from today, namely, 7 March 1999. 2 The relevant facts are as follows. Receivers were appointed to SCA and SCE by LTCB Australia limited, as trustee for six Japanese banks, on 4 July 1997. SCA and SCE were both placed into liquidation on 1 November 1998 consequent upon the receivers having realised all of the assets of the two companies and having directed all of the proceeds of sale of those assets to LTCB for distribution to the six Japanese banks. The six Japanese banks are stated to be owed $282,979,773.05 by SCA and SCE. This amount comprises approximately 98 percent of all the claims which are provable in liquidation of the two companies. 3 The liquidators lodged a section 533 report on 4 December 1998. On 16 December 1998 ASIC advised them that it did not propose to conduct an investigation into the affairs of either company and it had no objection to finalising the administration of the companies. Consequently final meetings of the members and creditors of the two companies were held for the purpose of s 509 of the Corporations Law on 5 February 1999. At those meetings the creditors who were present passed a resolution approving the present application to this Court. After the meetings final returns were lodged with the Commission on 11 February 1999 for the purposes of s 509. Section 509(5) has the effect that, those matters having occurred by that date, ASIC is required to deregister the company on 11 May 1998, that being the date of expiration of the three month period after the return was lodged. 4 In evidence before me today are letters from each of the six Japanese banks indicating that unless the companies are deregistered by 31 March 1999, they will suffer significant financial loss which could be avoided if an order were made by the Court under s 509(6) causing the deregistration to occur on a date prior to 31 March 1999. According to that evidence the actual deregistration of the companies is required in order satisfactorily to establish to the National Administration Agency (the relevant Japanese tax department) that no further assets can be recovered from the companies for the benefit of their creditors, and consequently to permit the Japanese banks to claim a write-off of the unrecoverable amount in the current financial year, which in each case, ends on 31 March 1999. 5 The letters from the banks are supported by an affidavit from Yukenori Watanabe affirmed on 23 February 1999. Mr Watanabe is an expert in the relevant Japanese law and has had considerable experience in dealing with the Japanese tax authorities in relation to debt write-offs. While he acknowledges that this area of Japanese law is currently in an uncertain transitional period, he expresses the expert opinion that, according to current practice regarding financial institutions, the National Administration Agency requires the most persuasive and clear evidence that there is absolutely no possibility of further recovery of the bad debt from the debtor. In the case of a corporate debtor, evidence of that nature would need to be evidence of the cancellation of the registration of the debtor within the financial period, in Mr Watanabe's view. 6 The present application has been made to me ex parte. Notice of it has been supplied to the Australian Securities and Investments Commission. ASIC has responded to the solicitors for the plaintiffs by letter of 19 February 1999 advising that it does not require to be added as a party to these proceedings, that it neither consents nor opposes the orders sought in the summons, and that it does not propose to appear. However, ASIC has requested that it be advised of the result of the application and that it receive an office copy of any orders made, pursuant to s 509(7) of the Corporations Law. 7 Section 509(6) empowers the Court, on the application (inter alia) of a liquidator, to make an order that ASIC deregister a company on a specified day, provided the Court makes the order within the three month period which in this case began on 12 February 1999. The plaintiff's solicitor has not been able to refer me to any authority in which s 509(6) has been used in the matter proposed, or where an application of the current kind has been refused. Nevertheless I am persuaded that this is a clear case for the making of the order, on the basis that if the order is not made the six Japanese banks would suffer a loss to which there is no particular reason to subject them. 8 Short minutes of orders were handed up. I make orders 1 to 4 in the short minutes which I initial and date for the purposes of identification. Last Modified: DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.