Australian Securities and Investments Commission v Diploma Group Limited (No 5)

In the Federal Court of Australia, the Australian Securities and Investments Commission (ASIC) contested an application by the liquidators of Diploma Group Limited to be appointed as administrators for the company. The liquidators sought leave to convene a second meeting of creditors to vote on a deed of company arrangement (DOCA) proposal. The primary issue was whether the liquidators were suitable to act as administrators, given that they would remain liquidators of related companies. A secondary issue was whether the convening of the second meeting should be contingent on the liquidators securing funding from ASIC’s Assetless Administration Fund.

The Court found in favour of the liquidators. It noted that the orders sought by the liquidators were consistent with common practices where liquidators act as administrators. The Court was satisfied that the liquidators would not face conflicts of interest or threats to their independence. It also determined that the orders would not terminate the winding up of the company or endorse the DOCA, which was a decision for the creditors. The Court acknowledged ASIC's concerns about the timing and funding of the second meeting, but concluded that these issues did not preclude the liquidators from acting as administrators. The Court ordered that the liquidators be appointed as administrators, the second meeting of creditors be convened at the earliest convenient date, and the liquidators' costs be paid from the company’s assets.