Blundell, in the matter of Reacon Australia Pty Ltd (in liquidation) v Ctrl Print Pty Limited as trustee for Ctrl Print Management Unit Trust

In the matter of Reacon Australia Pty Ltd (in liquidation), the liquidators, Mr Blundell and Mr Cathro, applied to the court to be appointed as voluntary administrators of the company under section 436B(2)(g) of the Corporations Act 2001 (Cth). The primary objective of this application was to facilitate the appointment of Mr Vikrant Gulati as the administrator of Reacon, contingent upon the acceptance of a revised deed of company arrangement (DOCA) by the creditors. The court was required to decide whether the application for the liquidators to be reinstated as administrators should be granted, considering the potential advantages of the new DOCA over liquidation and the implications for the company's creditors and employees.

The court deliberated on the merits of the proposed DOCA, which aimed to place the company into voluntary administration and convene a second meeting of creditors. The primary consideration was the potential for the DOCA to return the company to profitability and the likelihood of preserving jobs. The court noted the liquidators' investigation into potential claims against Mr Jahangir Khan, the former director, and found that the benefits of pursuing such claims were minimal. Additionally, the court acknowledged the potential for Reacon to retain its rights against Mr Khan if the DOCA was successful. Given these factors, the court concluded that the advantages of the new DOCA outweighed the benefits of liquidation, and thus, the application should be granted.

The court granted the liquidators leave to be reinstated as administrators of Reacon to allow them to convene a second meeting of creditors. The court also made ancillary orders to modify the operation of certain sections of the Corporations Act and the Insolvency Practice Schedule, facilitating the administration process without the need for certain preliminary steps and investigations. Furthermore, the winding up of the company was stayed until the end of the voluntary administration. The orders also provided for the method of notifying creditors and the payment of the liquidators' costs from the company's assets. This decision underscores the importance of considering the potential benefits of a DOCA over liquidation, especially when there is a realistic prospect of returning a company to solvency.