Aviation 3030 Pty Ltd (in liq) v Lao, in the matter of Aviation 3030 Pty Ltd (in liq)

Aviation 3030 Pty Ltd (in liq) v Lao, in the matter of Aviation 3030 Pty Ltd (in liq) involved the liquidators of Aviation 3030, who brought an action against the Lao defendants, including Mr Lao and Lao Holdings Pty Ltd, for an unreasonable director-related transaction and breaches of directors' duties. The case centred around the issuance of founder shares in March 2016 at a significantly low price compared to other transactions, which diluted the interests of existing shareholders. The key issues before the court included whether the transaction was an unreasonable director-related transaction under s 588FDA of the Corporations Act 2001 (Cth), the availability of relief under s 588FF(4) for a solvent company, and whether the term "creditor" in s 588FF(4) includes shareholders.

The court found that the March 2016 Share Issue was indeed an unreasonable director-related transaction, as it was issued at a price significantly below market value, and the failure to disclose this adequately to existing shareholders constituted a breach of directors' duties. The court held that the term "creditor" in s 588FF(4) of the Corporations Act includes shareholders, allowing for the crafting of a remedy that benefits all shareholders. The court also ruled that Lao Holdings Pty Ltd must pay the sum of $9,044,000 to Aviation 3030, which would be distributed equally among all shareholders once the company was wound up. Additionally, the court ordered that the costs of the proceeding be paid 50% by Lao Holdings, pending the final distribution of Aviation 3030's assets. The proceeding against the Seventh Defendant was dismissed with no order as to costs.