In the matter of Naturelink Environmental Services [2014] NSWSC 1883

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Naturelink Environmental Services [2014] NSWSC 1883 Hearing dates: 1 September 2014 Decision date: 01 September 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Order that company be wound up in insolvency Catchwords: CORPORATIONS – winding up – failure to comply with creditors' statutory demand – whether presumption of insolvency rebutted – stay of winding up order where offer of finance available Category: Procedural and other rulings Parties: QBE Insurance (Australia) Limited AC 003 191 035 (plaintiff) Naturelink Environmental Services Pty Ltd (in liquidation) ABN 79 003 193 539 Laurence Court Pty Ltd (ACN 124 199 613 (first supporting creditor) Combined Property Holdings Pty Ltd (ACN 161 599 444) (second supporting creditor) Representation: Counsel: M McAuley (plaintiff) E Havas (defendant) M Lawrence (supporting creditors)

Solicitors: Turks Legal (plaintiff) Duncan McCartney, Queensland (defendant) O'Connor Legal (first supporting creditor) Robert James Lawyers, Melbourne (second supporting creditor) File Number(s): 2014/193411

Judgment (ex tempore) 1. HIS HONOUR: By originating process filed on 30 June 2014, the plaintiff QBE Insurance Australia Limited, seeks an order that the defendant Naturelink Environmental Services Pty Limited be wound up in insolvency and a liquidator appointed. 2. The plaintiff caused to be served on the defendant at its registered office on 26 March 2014 a creditors' statutory demand for the payment of its claim in the sum of $185,908.08, due under a judgment given on 27 February 2014 in the District Court. The defendant has failed to comply with the creditors' statutory demand and is presumed to be insolvent. 3. Two affidavits, not sworn by a director of the defendant but by its solicitor, Duncan Grant McCartney, on 22 August and 28 August respectively, annex an unsigned and undated financial statement of the defendant which purports to show net assets of $221,962 and current assets of $229,000, with current liabilities of $111,000. However, somewhat remarkably, the financial statements fail to include the debt which founded the creditors' statutory demand - which does not appear ever to have been the subject of dispute - nor the debt claimed by the supporting creditor. In those circumstances, grave doubts attend these unverified and unvouched financial statements. In any event, even if they demonstrate a surplus of current assets over current liabilities, they do not show that the defendant is able to pay its debts as and when they fall due. In my view, the evidence fails to rebut the presumption of insolvency. 4. The defendant has, however, also tendered a letter of offer by Capital One of short-term private funding of $360,000 by way of loan to the defendant for a term of six months. Some indication of the nature of this funding is provided by the interest rate of 22 per cent per annum. The offer, dated 27 August 2014, is said to be valid for seven days and to expire on 3 September, which is in two days. There are a number of special conditions. The evidence before the court does not indicate whether the offer has been accepted and, if so, when it will be implemented and when the proceeds will become available, but as it provides for expiry on 3 September 2014, it would seem that it must be within a short time frame. 5. As I have said, I am not satisfied that the presumption of insolvency is rebutted. On the other hand, there seems to be some prospect that the defendant might come into funds in the short-term which would enable the plaintiff's debt to be discharged. In those circumstances, I propose to make a winding up order but to stay its operation for seven days. Bradd Morelli, official liquidator, has consented to be appointed as liquidator. All other formal requirements for the making of a winding up order have been satisfied. 6. The court orders that: 1. Naturelink Environmental Services Pty Limited be wound up in insolvency. 2. Bradd Morelli of Jirsch Sutherland, Level 5, 55 Hunter Street, Sydney, be appointed liquidator. 3. The operation of the above orders be stayed until 8 September 2014. 4. The defendant have leave to apply prior to 8 September 2014 to set aside these orders, any such application may be made returnable on 8 September at 9.45 in the Corporations Judge motions list. 5. The plaintiff's costs of the proceedings be fixed in the sum of $7,727.16.