In the Matter of 246 Arabella Investments Pty Limited (in Liq) [2012] NSWSC 1212

Supreme Court New South Wales

Medium Neutral Citation: In the Matter of 246 Arabella Investments Pty Limited (in Liq) [2012] NSWSC 1212 Hearing dates: Thursday 30 August 2012 Decision date: 30 August 2012 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Approve the liquidator's application to compromise a debt Catchwords: CORPORATIONS - external administration - approval of liquidator compromising a debt - Corporations Act, s 477(2A), s 477(2B) - application opposed by sole creditor - nature of opposition to compromise - whether in all the circumstances the compromise of the debt is a reasonable step to take - commercial merits or compromise generally a matter for the liquidator - factors in favour of approval - factors against approval - interests of creditors a guiding light Legislation Cited: (Cth) Corporations Act 2001, s 477(2A), s 477(2B), s 588FB, s 588FDA, s 588FE (NSW) Conveyancing Act 1999, s 37A Cases Cited: Re HIH Insurance Limited [2004] NSWSC 5 Re CIC Insurance Limited (2001) 38 ACSR 181 Category: Interlocutory applications Parties: Geoffrey Trent Hancock as liquidator of 246 Arabella Investments Pty Limited (plaintiff) Deputy Commissioner of Taxation Representation: Mr M Doble (solicitor) - Plaintiff Mr T Cleary - Deputy Commissioner Eakin McCaffery Cox - Plaintiff ATO Legal Services Branch - Deputy Commissioner File Number(s): 2011/ 397461

Judgment (ex tempore) 1HIS HONOUR: By originating process filed in court yesterday and made returnable instanter, the plaintiff Geoffrey Trent Hancock in his capacity as liquidator of the company 246 Arabella Investments Pty Limited ("the Company") seeks approval pursuant to (Cth) Corporations Act 2001, s 477(2A) and (2B), to enter into an agreement on the Company's behalf to compromise a debt owed to the Company. 2The plaintiff and Alan Godfrey Topp were appointed liquidators on 15 December 2008; Mr Topp resigned on 2 April 2009. The application is opposed by the sole creditor, the Deputy Commissioner for Taxation, who claims in the winding-up for a sum exceeding $10 million for unpaid tax. The tax debt arises pursuant to notices of assessment issued to the company on 3 November 2008, and penalties, interest, additional tax for late payment and general interest charge that have since increased the debt. 3Corporations Act, s 477, relevantly provides as follows: (2A) 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 to the company if the amount claimed by the company is more than: (a) ... (b) otherwise - $20,000. (2B) 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 enter into an agreement on the company's behalf (for example, but without limitation, a lease or a an agreement under which a security interest arises or is created) if: (a) without limiting paragraph (b), the term of the agreement may end; or (b) obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance; more than 3 months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those 3 months.