Dean-Willcocks v ATTT Investments Pty Ltd [1999] NSWSC 642

Reported Decision : [1999] 17 ACLC 1310

New South Wales Supreme Court CITATION : Dean-Willcocks v ATTT Investments Pty Ltd [1999] NSWSC 642 CURRENT JURISDICTION : Equity Division FILE NUMBER(S) : 2859/99 HEARING DATE(S) : 23/06/99 JUDGMENT DATE : 23 June 1999

Ronald John Dean-Willcocks (P) PARTIES : ATTT Investments Pty Limited (D1) First Sydney Capital Pty Limited (D2) Australian Land and Cattle Company Pty Limited (D3) JUDGMENT OF : Young J

COUNSEL : SOLICITORS : Solicitor for Plaintiff (Ex parte): G Cussen (Kemp Strang) CATCHWORDS : Corporations [281]; Liquidator; Proposed arrangement; Whether compromise; What court needs to consider on application to approve ACTS CITED : Corporations Law ss 477(1)(c), 477(2A), 477(2B), 479(3) Re E D White Ltd (1929) 29 SR (NSW) 389 CASES CITED : Re Federal Bank of Australia; Re McConnell (1893) 15 ALT 126 Mercantile Investment and General Trust Co v International Co of Mexico [1893] 1 Ch 484n Re Spedley Securities Ltd (1992) 9 ACSR 83 DECISION : No order made at this stage

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG, J

WEDNESDAY 23 JUNE 1999

2859/99 - RONALD JOHN DEAN-WILLCOCKS V ATTT INVESTMENTS PTY LTD & ORS

JUDGMENT

1 HIS HONOUR : This is an application under section 477(2A) of the Corporations Law seeking that the plaintiff liquidator be entitled to compromise certain claims of the first defendant company as against the third defendant. 2 The first, second and third defendant companies, the first two in liquidation, the third under administration, are all related. The plaintiff, who is a registered liquidator, is the liquidator or administrator of them all. Before they became subject to external administration, the companies were controlled by a Mr Gallagher and a Mr Stotter, the latter appears to be the son of the former. Mr Gallagher was also involved at some stage as a director and evidently still as a shareholder in Project and General Finance Pty Ltd which is a secured creditor of some or all of the first three defendants. 3 I will assume that the first three defendants are insolvent. There are intergroup transactions. There is a secured debt to Project and General Finance Pty Ltd and there are unsecured debts owing to general creditors. 4 The liquidator has obtained statutory declarations from Mr Gallagher and Mr Stotter which suggest that neither of these gentlemen is, to put it colloquially, worth powder and shot. The scheme that has been worked out is that the secured creditor will inject some moneys into the companies. It will take a particular asset. The claims of Mr Gallagher and his associates will be deferred. The independent unsecured creditors will be paid 100 cents in the dollar and the intercompany debts will virtually be wiped out. At least the third defendant will then go back and trade. The first two defendants will remain in liquidation. 5 The liquidator has made an affidavit that he does not believe that the ordinary unsecured creditors of the first and second defendants are disadvantaged by the orders sought in the summons and further, that in his opinion the compromise is a commercial resolution of the relevant debts. 6 The liquidator is given power under s 477(1)(c) of the Corporations Law to make any compromise or arrangement with creditors or persons claiming to be creditors. However, subsection 2A of that section provides that: "Except with the approval of the Court, of the committee of inspection or of a resolution of the creditors, a liquidator of a company must not compromise a debt ..."