HIH Overseas Holdings [2001] NSWSC 426

New South Wales Supreme Court

CITATION : HIH Overseas Holdings [2001] NSWSC 426 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 1811/01 HEARING DATE(S) : 16/05/01 JUDGMENT DATE : 16 May 2001

PARTIES : In the matter of HIH Overseas Holdings Limited (in provisional liquidation) Anthony Gregory McGrath and Alexander Robert Mackay MacIntosh (Provisional Liquidators) - Plaintiffs JUDGMENT OF : Barrett J

COUNSEL : Mr B.A. Coles QC - Applicants Mr M. Murray (Solicitor) - APRA SOLICITORS : Blake Dawson Waldron - Applicants CATCHWORDS : CORPORATIONS - Winding up - Contract by provisional liquidator not to be performed within three months - Principles on which Court will give approval for such contract LEGISLATION CITED : Corporations Law s.477(2B) Corporate Affairs Commission v ASC Timber Pty Ltd (1998) 29 ACSR 109 CASES CITED : Re HIH Insurance Group Ltd [2001] NSWSC 308 Re G A Leasing & Maintenance Pty Ltd (1994) 15 ACSR 308 DECISION : Order approving provisional liquidators entering into contract

THE SUPREME COURT REVISED OF NEW SOUTH WALES EQUITY DIVISION

BARRETT J

WEDNESDAY 16 MAY 2001 1811/01 - IN THE MATTER OF HIH OVERSEAS HOLDINGS LTD JUDGMENT HIS HONOUR : 1 Mr McGrath and Mr Macintosh, the provisional liquidators of HIH Overseas Holdings Ltd (which I shall call "HIH"), have committed HIH to a conditional contract entitled Stock Purchase Agreement between HIH as seller and QBE Insurance Group Ltd as purchaser. The agreement provides for the sale and purchase of a shareholding interest of 65 percent in an Argentine company called HIH Aseguredora de Riesgos del Trabajo SA. 2 The agreement is dated 11 May 2001 and, according to its terms, is to be completed on 30 May 2001. It is a term of the contract that HIH must obtain "approval for the sale of the shares from the Liquidation Court" which is defined as "the court with jurisdiction over the provisional liquidation" of HIH - in other words, this Court. 3 The need for the Court's approval in relation to the contract arises from s.477(2B) of the Corporations Law. That section says that, except with the approval of the Court, a liquidator may not enter into an agreement on a company's behalf if obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance more than three months after the agreement is entered into, even if the obligations may be discharged within that period of three months. Section 477(2B) of the Corporations Law is relevant in this case because the power the provisional liquidators of HIH are exercising and have exercised in connection with the agreement are the powers conferred by s.477(2)(c). They possess these powers by virtue of s.472(4)(b). 4 The agreement before the Court contains provisions which may not be discharged by performance for as long as 24 months from the completion date which, as I have said, is 30 May 2001. This means that the company may continue to be subject to financial commitments pursuant to the agreement until 30 May 2003. The commitments in question are the so-called indemnification commitments in article VIII of the agreement. They are spelt out in that provision.