Supreme Court New South Wales Medium Neutral Citation: In the matter of Bytecan Pty Limited (in liquidation) [2019] NSWSC 1910 Hearing dates: 20 December 2019 Date of orders: 20 December 2019 Decision date: 20 December 2019 Jurisdiction: Equity - Corporations List Before: Rees J Decision: Approval under section 477(2A) of the Corporations Act 2001 (Cth) of entry into a deed of settlement compromising Bytecan's claims against Nokia Siemens Networks Australia Pty Limited. Orders made under section 564 of the Corporations Act 2001 (Cth) to distribute the settlement proceeds, after payment of the special purpose liquidator's fees and expenses, to the plaintiff less the general purpose liquidator's remaining costs of the proceedings and estimated costs to complete the winding up. Catchwords: CORPORATIONS – approval of deed of settlement under section 477(2A) – power of court to give creditors advantage over others – meaning of "over others" in s 564 of the Corporations Act – whether extends to general purpose liquidator –– consideration of risk assumed by indemnifying creditor – whether indemnifying creditor received a 'windfall' – importance of liquidator having funds to complete tasks – deduction for general purpose liquidator's remaining costs of the proceedings and estimated costs to complete the winding up Legislation Cited: Bankruptcy Act 1966 (Cth), ss 108, 109 Corporations Act 2001 (Cth), ss 477(2A), 556, 564 Corporations Regulations 2001 (Cth), reg 5.4.02 Fair Entitlements Guarantee Act 2012 (Cth) Personal Property Securities Act 2009 (Cth) Cases Cited: Atco Controls Pty Ltd (in liq) v Stewart (in his capacity as liquidator of Newtronics Pty Ltd) [2013] VSCA 132 Australia and New Zealand Banking Group Ltd v TJF EBC Pty Ltd [2006] NSWSC 25; (2006) 224 ALR 490 Carson, In the matter of Trollope Property Holdings Pty Ltd (In Liquidation) (ACN 005 649 212) [2009] FCA 118 Deputy Commissioner of Taxation v Vintage Gold Investments Pty Limited (in liq) [2009] FCA 967 Household Financial Services Pty Limited v Chase Medical Centre Pty Limited (1995) 18 ACSR 294 Low v Barnet (2017) 250 FCR 562; [2017] FCAFC 60 Re Home Corp Projects (2002) 20 ACLC 1751; [2002] NSWSC 879 Re Rubix Investments Group Pty Ltd (in liq) [2018] NSWSC 1184 Robinson, in the matter of ACN 069 895 585 Pty Ltd (formerly known as Waterman Collections Pty Ltd (in liq) [2013] FCA 706 Stewart (in his capacity as liquidator of Newtronics Pty Ltd (recs and mgrs apptd) (in liq)) and Another v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307; [2014] HCA 15 Category: Principal judgment Parties: Apricity Finance Group (Plaintiff) Bytecan Pty Ltd (in liq) (First Defendant) Steve Nicols (Second Defendant) Representation: Counsel: Ms IJ King (Plaintiff) Mr D Nagle (First and Second Defendants) Solicitors: MCW Lawyers (Plaintiff) Lancaster Law & Mediation (First and Second Defendants) File Number(s): 2017/278629 ex tempore Judgment (revised 7 February 2020) 1. HER HONOUR: This is an application by Darren Vardy, special purpose liquidator of Bytecan Pty Limited (in liquidation) for: 1. approval under section 477(2A) of the Corporations Act 2001 (Cth) of entry into a deed of settlement compromising Bytecan's claims against Nokia Siemens Networks Australia Pty Limited; and 2. orders under section 564 of the Corporations Act 2001 (Cth) to distribute the settlement proceeds, after payment of the special purpose liquidator's fees and expenses, to the plaintiff, Apricity Finance Group Pty Ltd – at whose application Mr Vardy was appointed – to the exclusion of other creditors and the general purpose liquidator. The general purpose liquidator of Bytecan, Steven Nicols, does not oppose the application save for being excluded from that portion of the settlement monies necessary to have his remaining costs paid, being costs already incurred in relation to these proceedings and further costs which will be incurred to conclude the winding up of Bytecan. 1. I heard this application at 2.30 pm on the last day of Court term and gave an ex tempore judgment. In the course of reviewing that judgment, I have also reviewed the parties' written submissions and the authorities on which each relied: some of the submissions were made and authorities provided during the hearing but others not. It is apparent that, whilst no changes need be made to the orders which I made, my reasons did not record all relevant facts and law. As a consequence, I have circulated this revised judgment to the parties before publication and invited them to make any further submissions in respect of paragraphs [24] to [28]. No further submissions were made. Facts 1. Bytecan installed mobile phone towers for telecommunications networks including Nokia: in 2011, Bytecan and Nokia entered into an Agreement for Services. Apricity is engaged in invoice financing or "factoring", purchasing invoices rendered by a customer to a third party for a percentage of the face value of the invoice. The invoices are then assigned to Apricity which collects the face value of the invoice from the third party. In 2014, Bytecan entered into an Agreement to Purchase Accounts Receivables with Apricity, being a factoring arrangement including in respect of monies owed to Bytecan by Nokia. Bytecan authorised Apricity to register security interests under the Personal Property Securities Act 2009 (Cth) (PPSA) against Bytecan. Not all of Bytecan's invoices were factored to Apricity: non-factored invoices remained assets of Bytecan and were not subject to any security interest granted to Apricity. 2. In 2015, a general purpose liquidator was appointed by Bytecan. In his report to creditors of April 2015, Mr Nicols advised that considerable difficulties were being experienced in recovering money from Nokia, and "it would now appear highly unlikely that there will be any recovery from the 20% non-factored debtor invoice claims against Nokia". In 2016, Bytecan assigned its interest under invoices rendered to Nokia to Apricity and Apricity issued a notice of assignment to Nokia. Nokia refused to recognise the assignment as it was contrary to a prohibition against assignment contained in the Agreement for Services. 3. In 2017, Apricity filed an Originating Process seeking to appoint a special purpose liquidator to Bytecan to pursue Bytecan's claims against Nokia, both in respect of factored invoices and non-factored invoices. Apricity was not prepared to fund or indemnify Mr Nicols to pursue these claims. Apricity agreed to fund the costs of the special purpose liquidator and to meet any adverse costs orders made against Bytecan or the special purpose liquidator. Apricity offered a bank guarantee in the sum of $200,000 as a condition of any order made. 4. Mr Nicols filed an affidavit in respect of the application noting that a substantial asset of Bytecan at the time of his appointment was non-factored claims against Nokia of $258,142.12 of which some $54,000 had been accepted by Nokia. Mr Nicols deposed that he had dealt with Nokia in respect of the non-factored claims and had formed the view that Nokia had examined the issues, believed the debts were not payable "and as such will go to extreme lengths to defend any claim for the debts that is brought against them". Mr Nicols was content to partake in and assist with any litigation against Nokia but only if Apricity provided an indemnity for his fees, which was not forthcoming. Mr Nicols expressed a concern that the anticipated proceedings appeared to provide no benefit to Bytecan as there was no detail as to how any recoveries by Apricity were to be disbursed between the competing claims of Apricity and Bytecan; there was no provision for the costs of Mr Nicols having to deal with any special purpose liquidator to resolve the issue of distributing funds recovered; the orders proposed by Apricity made no provision for any indemnity or security to be paid in respect of any costs incurred by the liquidator in providing assistance in the proposed claim against Nokia or any adverse costs order which may be made against the company; nor was provision made for payment of his costs in responding to the application. 5. On 6 November 2017, Black J made orders appointing a special purpose liquidator to pursue Bytecan's claims against Nokia on provision of the bank guarantee and an undertaking by Apricity to the Court to indemnify Bytecan and the general purpose liquidator for costs incurred in respect of these proceedings up to $20,000, with an ability for the general purpose liquidator to seek further indemnity if that amount proved insufficient. Apricity and Mr Vardy also undertook to the Court not to distribute any proceeds recovered without first obtaining the consent of Mr Nicols or an order of the Court. 6. In January 2018, Mr Vardy sought payment from Nokia of $945,246.82 being factored invoices totalling $682,080.80 and un-factored invoices totalling $263,166.02. Nokia disputed that it was liable for the un-factored invoices and alleged that it had claims against Bytecan totalling $880,867.88 which it was entitled to set off against any amount payable to Bytecan. On 9 October 2019, after what appears to have been a very hard fought piece of litigation, Apricity secured a settlement of the claim against Nokia for $500,000. Mr Vardy entered into a Deed of Settlement and Release with Nokia, Apricity, Bytecan and Mr Nicols. It is not known what portion of the $500,000 was referable to the factored or unfactored portions of the claims brought against Nokia. One thing is for certain however: those monies would not have been extracted from Nokia had all had it not been for the persistence of Apricity. Mr Vardy deposed that no action against Nokia would have been possible without the payment of his ongoing costs and expenses and the provision of an indemnity for adverse costs orders given by Apricity. Mr Vardy deposed that Nokia did not make commercial offers to resolve the claim until their employees had been examined for two days, they had produced documents in response to examination summonses and Mr Vardy had instructed his solicitors to prepare and issue a draft notice of arbitration to Nokia. Prior to taking these steps, Nokia had maintained a consistent position that any claim by Bytecan against Nokia was almost completely offset by Nokia's claimed losses. 7. On 14 October 2019, Mr Vardy sought Mr Nicols' consent to distributing the settlement monies by payment of $133,671.59 to Mr Vardy for legal and professional fees and the balance to Apricity as a dividend return to secured creditors. On 17 October 2019, Mr Nicols advised that he did not consent to the proposed distribution as it made no allowance for funds to be paid to Bytecan in circumstances where the settlement amount included monies for the un-factored debts due to the company. Further, as a result of the claim made by the special purpose liquidator, Mr Nicols deposed that the finalisation of the liquidation has been delayed and he has had to lodge additional reports with the Australian Securities and Investments Commission (ASIC) that he would not have otherwise had to lodge. He has thus incurred and continues to incur costs and expenses in the liquidation of the company because of the application and appointment of the special purpose liquidator. 8. On 21 November 2019, Mr Vardy filed this application. Notice of this application has been given to ASIC, the Fair Entitlements Guarantee (FEG) Scheme and the Australian Taxation Office (ATO). In the liquidation of Bytecan, priority payments were made by the Commonwealth Government under the Fair Entitlements Guarantee Act 2012 (Cth) of $2,486,604.48 to employees and other funding under that Act of $37,380 which would have priority under section 556 of the Corporations Act. The FEG Scheme is the only creditor with a potential economic interest in the outcome of the application and does not seek to be heard. Approval of settlement 1. Except with the approval of the Court, the committee of inspection or a resolution of creditors, a liquidator must not compromise a debt to the company if the amount claimed by the company is more than $100,000: section 477(2A) of the Corporations Act; Corporations Regulations 2001 (Cth), reg 5.4.02. In deciding whether to approve a settlement, it is not necessary for me to consider the commercial bargain which has been struck by the liquidator or to 'second guess' his or her judgement. The question is whether the proposed settlement is in the interests of creditors and there is no absence of good faith, error in law or principle or any real or substantial ground for doubting the prudence of the liquidator's conduct: Re Rubix Investments Group Pty Ltd (in liq) [2018] NSWSC 1184 at [25]–[27] and [33]. 2. I consider it appropriate to approve the settlement in this case as it is the result of a protracted, hard bargain struck between sophisticated parties and thus likely to represent fair value for the last remaining asset of the company. Extraction of value for this asset via the Deed of Settlement will also enable the liquidation of Bytecan to be finalised. General purpose liquidator's further costs of these proceedings 1. The $20,000 provided by Apricity to the general purpose liquidator in 2017 has been all but exhausted and Mr Nicols' legal representatives have incurred some $13,830 plus GST in the course of preparing for and appearing on the application before the Court today. Apricity accepted at the hearing that Mr Nicols' costs of appearing on this application fell within the terms of the indemnity given by Apricity in November 2017. Thus, Mr Nicols is entitled to seek a further indemnity from Apricity for those costs which should, it seems to me, be paid from the settlement monies without the need for Mr Nicols to bring a formal application to do so with the attendant costs of such an application. Distribution of settlement monies 1. Section 564 of the Corporations Act provides: Power of Court to make orders in favour of certain creditors Where in any winding up: (a) property has been recovered under an indemnity for costs of litigation given by certain creditors, or has been protected or preserved by the payment of money or the giving of indemnity by creditors; or (b) expenses in relation to which a creditor has indemnified a liquidator have been recovered; the Court may make such orders, as it deems just with respect to the distribution of that property and the amount of those expenses so recovered with a view to giving those creditors an advantage over others in consideration of the risk assumed by them. 1. Apricity relied on Household Financial Services Pty Limited v Chase Medical Centre Pty Limited (1995) 18 ACSR 294 at 296-297, where Brownie J identified relevant factors to be considered on such an application including the risk run by the indemnifying creditors, the sum recovered, the failure of other creditors to provide the indemnity, the proportions between the debts of the indemnifying creditors and the other debts, the public interest and encouraging creditors to provide indemnities so as to enable assets to be recovered, and, generally, the totality of the circumstances. Reliance was also placed in Robinson, in the matter of ACN 069 895 585 Pty Ltd (formerly known as Waterman Collections Pty Ltd (in liq) [2013] FCA 706 at [13] per Gordon J. 2. Apricity readily accepted that the order sought today is highly unusual, that is, that it should receive effectively 100% of the settlement amount without any deduction for the general purpose liquidator's remaining or further costs of the liquidation or the interest of other priority creditors, and relied on Deputy Commissioner of Taxation v Vintage Gold Investments Pty Limited (in liq) [2009] FCA 967, followed in Low v Barnet (2017) 250 FCR 562; [2017] FCAFC 60 at [54] in support of the order sought. Such an order was said to be appropriate given that a large portion of the claims brought against Nokia were in fact secured claims in any event, the general purpose liquidator's reluctance to take the proceedings and the significant tenacity which Apricity had to display in order to secure what appears to be a very good outcome. Apricity was said to have incurred a significant risk in indemnifying Mr Vardy in his conduct of examinations and negotiations with Nokia, having provided a bank guarantee of $200,000 to fund the proceedings. The risk was said to be particularly great in light of Mr Nicols' views as to prospects of the litigation and the vigorous opposition presented by Nokia, a well funded opponent. The settlement amount represented a very significant improvement on Nokia's opening offer of $50,000 which was reduced to a "walk away" offer at the end of the examinations. No other creditors were willing to provide such an indemnity. A large portion of the amount recovered by Mr Vardy was said to be properly regarded as a recovery on behalf of a secured creditor and thus outside the section 564 regime: Stewart v Atco Controls Pty Limited (in liq) (2014) 252 CLR 307; [2014] HCA 15 at [56]. There was also a public interest in encouraging creditors to provide indemnities so as to enable assets to be recovered and this pointed in favour of granting priority to Apricity ahead of all other creditors in the liquidation, including Mr Nicols beyond the $20,000 indemnity already provided. As to the $20,000 indemnity, Apricity retreated from this tough stance at the hearing, as mentioned at [13]. 3. Mr Nicols acknowledged that the special purpose liquidator has prosecuted the claims against Nokia to settlement but added that Mr Vardy appeared to have done so by including the unfactored invoices owed to Bytecan, and to which Apricity had no claim, thereby increasing the potential claim by at least $263,166.02 and likely thereby increasing the settlement sum. The unfactored invoices made up some 28% of the claim prosecuted against Nokia. In Mr Nicols' written submissions, it was submitted that 28% of the settlement sum after payment of the costs of the special purpose liquidator would result in $101,985.83 being applied to the other creditors of Bytecan. If funds were received back into Bytecan, then he would apply those funds as a dividend payment under the Fair Entitlements Guarantee Act. At the hearing, Mr Nicols did not suggest that any other creditors of Bytecan should be given greater priority to Apricity but simply that his costs of completing the winding up be met. To be given greater priority than the general purpose liquidator to the exclusion of the small amount of costs needed to finalise the liquidation was not just and equitable. 4. Mr Nicols submitted that cases in which the courts have awarded 100% of the recovered funds to the funding creditor are rare: Carson, In the matter of Trollope Property Holdings Pty Ltd (In Liquidation) (ACN 005 649 212) [2009] FCA 118 at [15]; Australia and New Zealand Banking Group Ltd v TJF EBC Pty Ltd [2006] NSWSC 25; (2006) 224 ALR 490 at [23]-[24]. Cases that awarded 100% of the recovered funds to the funder have had particular features, being that the amounts awarded have been very small and no unsecured creditor opposed the distribution: Re Home Corp Projects (2002) 20 ACLC 1751; [2002] NSWSC 879 at [14]; Australia and New Zealand Banking Group Ltd v TJF EBC Pty Ltd at [23] and [24]. The courts have previously considered net recoveries of $7,000 and $114,000 as small: Re Home Corp Projects at [15]. This was no small recovery. 5. Mr Nicols sought to distinguish Vintage Gold on the basis that, in that case, there was only one liquidator and a funding agreement. The ATO provided an indemnity and funds into the liquidation to see if they could obtain more money. Here, Apricity applied for a special purpose liquidator to be appointed rather than simply to replace the general purpose liquidator. Mr Nicols submitted that, under section 556, he had priority in respect of unsecured debts, which included the unfactored claims which likely formed part of the settlement monies. Here, substantial funds have been obtained greatly in excess of the costs of obtaining them. The general purpose liquidator was obliged to appear at the hearing. To find otherwise would be to raise difficult policy questions in the future in relation to the operation of section 564 between a special purpose and a general purpose liquidator. 6. Further, Mr Nicols submitted that, in Low v Barnet the Full Court of the Federal Court of Australia held that section 109(10) of the Bankruptcy Act 1966 (Cth), the equivalent of section 564 of the Corporations Act, allows an indemnifying creditor priority over all other creditors but not over all others generally: at [24], [41], [55], [57], [69] and [107]. Nor does section 109(10) entitle the indemnifying creditor to recover more than a return of their outlay for the costs involved in the recovery of property in consideration of the risk they have assumed: Low v Barnet at [40], [66]-[67], [96] and [104]. Mr Nicols submitted that Vintage Gold was incorrect in so far as it allowed indemnifying creditors priority over the liquidator. Consideration 1. The problem here is twofold: should an order be made under section 564 giving Apricity priority over other creditors including the FEG Scheme; and, should an order be made under section 564 giving Apricity priority over the general purpose liquidator. 2. As to the first question, Mr Vardy and Mr Nicols are largely of the same mind: although the FEG Scheme is a large unsecured creditor, it has been notified of this application and does not seek to be heard. Essentially for the reasons agitated by Apricity, it seems to me appropriate that Apricity be given priority over other creditors of Bytecan. True it is that the claim brought by Mr Vardy against Nokia comprised factored invoices over which Apricity held security and also un-factored invoices which were assets of Bytecan and thus the assets of Bytecan contributed in some undefined way to obtaining a settlement of $500,000. Against that, the factored invoices were ones which Nokia had already accepted it was obliged to pay whilst it disputed the un-factored invoices and thus the contribution of the un-factored invoices to the amount of the settlement monies may be thought to be substantially less than that of the factored invoices. More importantly, it appears from the evidence that Mr Nicols had made a decision not to pursue the un-factored invoices in any event. This is not to make any criticism of Mr Nicols but simply to say that the un-factored invoices would not have been pursued at all apart from Apricity's investment and actions. 3. Whilst the settlement of $500,000 exceeds Apricity's outlay to the special purpose liquidator in the course of pursuing Nokia by some $360,000 and, as matters have unfolded, Apricity's bank guarantee of $200,000 has not been called upon, the net amount is still less than the factored invoices of some $682,000 which, as I understand the evidence, Apricity was entitled to pursue in any event as a secured creditor and which Nokia did not dispute were payable, subject to Nokia's claimed set offs. 4. The more controversial question is whether Apricity should be given priority over the general purpose liquidator. Two cases consider this question and both parties relied on these cases but in support of competing propositions. In Vintage Gold, the ATO provided $30,000 to the liquidator to pursue various claims on behalf of the company in liquidation. Monies were recovered by the liquidator but insufficient to meet the costs and expenses of recovery: the settlement sum was $86,500 but the liquidator's fees and disbursements totalled $171,882.90. The ATO sought an order under section 564 that it be reimbursed its $30,000 whilst the liquidator opposed this course on the basis inter alia that section 564 did not confer a power to distribute the monies in priority to the liquidator's costs and expenses as those costs and expenses were given priority by section 556(1) of the Corporations Act. His Honour, Greenwood J did not agree with the liquidator. The chapeau of section 556(1) provides: Subject to this Division, in the winding up of a company the following debts and claims must be paid in priority to all other unsecured debts and claims … 1. His Honour considered at [12]-[13]: [12] Section 556(1), subject to Division 6, attributes priority of payment to particular classes of debts and claims, as compared with all other unsecured debts and claims. The first such debt or claim is expenses properly incurred by the liquidator in preserving, realising or getting in the property of the company. Section 556(1) treats those expenses as a claim of the liquidator upon the estate or property of the company. Such a claim ranks above all other claims primarily because those expenses in the ordinary course represent the price paid to secure the company's assets or realise or get in the property of the company for the benefit of those entitled to participate in the distribution of that property according to the provisions of the Corporations Act. The paramouncy of those expenses conveys a clear statutory intention that the liquidator is entitled to recoup out of the property of the company, the costs and expenses "properly" incurred in taking the relevant steps that meet the statutory description in s 556(1)(a). However, that claim nevertheless remains a claim within s 556(1) and is subject to a power in the Court conferred by s 564 to adjust the order of priority including the paramouncy of such a claim, as appears just in all the circumstances, as between an indemnifying creditor and others. In that sense, the reference to others must be taken to be a reference to any other person (or entity) that has a debt or claim to be paid in the winding up of a company whatever the priority of that debt or claim may be according to the proper operation of the relevant provisions of the Corporations Act. [13] Accordingly, power is conferred upon the Court by s 564 to make an order that would have the effect of conferring an advantage upon an indemnifying creditor to a distribution of all or a part of the property of the company recovered under an indemnity for the costs of litigation, over the entitlement of the liquidator to payment of expenses properly incurred by him in preserving, realising or getting in property of a company notwithstanding the paramouncy of such a claim under s 556(1)(a). That is, although the liquidator's entitlement to be paid his or her fees and disbursements ranked highly in the 'ladder of priority' prescribed by section 556, the liquidator was still an unsecured creditor and thus potentially the subject of an order under section 564 altering his or her priority in favour of an indemnifying creditor. 1. As to whether an order should be made under section 564 in favour of the ATO, Greenwood J accepted that it would be "very unusual" to make an order which preferred an indemnifying creditor to that of the liquidator's claim for expenses but considered that there were two relevant factors in that case: at [40]. First, the ATO's indemnity was "catalytic" in recovering the monies at all but the recovery efforts of the liquidator and his solicitors also contributed to the final result. Second, the liquidator had apparently accepted in contemporaneous correspondence that the ATO was entitled, in principle, to payment from the recovered monies of the amount of the indemnity and this may have encouraged the ATO to provide the funds in the first place: at [41]. His Honour concluded that the loss suffered by the liquidator, his solicitors and the indemnifying creditor should be borne rateably: at [42]. His Honour ordered that $7,800 be paid out of the recovered monies to the ATO in consideration of the risk assumed by the ATO in providing the indemnity: at [45]. Vintage Gold was cited with approval by Redlich JA in Atco Controls Pty Ltd (in liq) v Stewart (in his capacity as liquidator of Newtronics Pty Ltd) [2013] VSCA 132 at [253] (reversed by the High Court in Stewart (in his capacity as liquidator of Newtronics Pty Ltd (recs and mgrs apptd) (in liq)) and Another v Atco Controls Pty Ltd (in liq) (2014) 252 CLR 307; [2014] HCA 15 on other grounds). 2. More recently, in Low v Barnet, the Full Court of the Federal Court of Australia considered the comparable provision of the Bankruptcy Act 1966 (Cth) in a slightly different factual context. The sole creditor of a bankrupt estate funded the trustee's efforts to recover two properties owned by the bankrupt in Victoria. The trustee was successful in obtaining title to the properties, which were sold at auction. The funding creditor's debts were fully repaid together with interest. The monies advanced by the funding creditor to the trustee to recover the properties was also fully reimbursed. A surplus of funds remained which, ordinarily, would have been paid to the bankrupt but the creditor sought an order under section 109(10) of the Bankruptcy Act to be paid the surplus as a reward for the assistance which she had provided to the trustee. The creditor failed at first instance and on appeal to the Full Court. The Court, comprising Flick, Jagot and Gleeson JJ, held that "over others" was confined to "over other creditors" and did not extend to conferring an advantage over all others, including the bankrupt: at [23]-[32]. Nor should the section be construed as conferring a "windfall" upon an indemnifying creditor beyond that which was necessary to give effect to conferring an "advantage" on the indemnifying creditor by reference to the risk assumed: at [36]-[37], [40]. As the bankrupt was not an "other creditor", the indemnifying creditor was not entitled to an order under section 109(10) against the bankrupt, nor did the bankrupt appear as a creditor in the 'ladder of priority' created by sections 108 and 109 of the Bankruptcy Act, equivalent to section 556 of the Corporations Act. 3. Importantly, in construing the section, the Full Court reviewed obiter comments in other authorities, including extracting Vintage Gold at [12]. The Court considered that in light of Vintage Gold (and other authorities), the phrase "over others" had consistently been regarded by prior courts as meaning "over other creditors" and considered these earlier authorities to express views which were considered to be persuasive: at [56]. The analysis in Vintage Gold has thus recently been endorsed by the Full Court of the Federal Court of Australia and I see no reason to depart from it. The general purpose liquidator is an unsecured creditor of the company in liquidation and, although the liquidator ranks highly in the 'ladder of priority' prescribed by section 556, the liquidator is nonetheless still an unsecured creditor and one in respect of whom an order may be made under section 564, albeit likely only in "very unusual" cases. Further, contrary to Mr Nicols' submission, an indemnifying creditor may be entitled to recover more than what they have outlaid as long as the advantage conferred by the court is "just" and referable to the risk assumed by the indemnifying creditor. Nor do I think it can be fairly said that Apricity will obtain a "windfall" if the settlement monies are paid to it, for the reasons given at [23]. 4. However, whilst in principle the order sought by Apricity may be made, I do not think it is "just" to pay the whole of the settlement monies to Apricity to the exclusion of the general purpose liquidator's anticipated costs of completing the winding up of Bytecan. It is important where possible for liquidators performing their ordinarily statutory functions to be funded rather than be expected to attend to their statutory duties unpaid in circumstances where there are funds, thanks to Apricity, with which those costs can be paid. The amount sought by the liquidator is relatively modest, being between $5,000 and $8,000 plus GST. I am minded to restrict the amount to be paid to the liquidator to the lower figure in that range and thus will make orders accordingly. ********** 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. Decision last updated: 12 February 2020