Australian Securities and Investments Commission v Storm Financial Ltd (recs and mgrs apptd) (admin apptd)

The case of Australian Securities and Investments Commission v Storm Financial Ltd (recs and mgrs apptd) (admin apptd) before the Supreme Court of Queensland involved a dispute over the administration and liquidation of Storm Financial Limited, a company that had been placed into administration due to significant financial difficulties. The central issue before the court was whether the Deed of Company Arrangement (DOCA) proposed by the administrators was valid, or whether the company had been in a state of "constructive insolvency" prior to the administration. The case also involved litigation over a $2 million payment made by Storm Financial to a third party, which the administrators sought to reclaim on behalf of the company.

The legal issues the court had to decide included whether the DOCA was fair and equitable to creditors, whether the proposed sum was appropriate, and whether the directors of Storm Financial had breached their duties in relation to the $2 million payment. The court had to consider the financial health of Storm Financial at the time of the administration, the appropriateness of the proposed DOCA, and whether the directors had acted in the best interests of the company and its creditors.

The court found that Storm Financial was indeed insolvent at the time of the administration and that the proposed DOCA was not fair and equitable to creditors. The court held that the $2 million payment made to the third party was a breach of the directors' duties and ordered the payment to be recovered. The court also dismissed the application by two of the directors to prevent the winding up of the company in insolvency. Ultimately, the court granted the application for the company to be wound up in insolvency, with Ivor Worrell and Rajendra Kumar Khatri appointed as liquidators. The court's decision was based on the evidence presented by the administrators and the legal principles applicable to company administration and insolvency.