Britax Childcare Pty Ltd v Infa Products Pty Ltd

Britax Childcare Pty Ltd brought an application against Infa Products Pty Ltd and its Administrators, seeking to set aside a Deed of Company Arrangement (DOCA) and a creditors’ resolution under the Corporations Act 2001 (Cth). Britax argued that the Administrators failed to consider claims for breach of duty against the Director of Infa, and that the casting vote used to pass the resolution in favour of the DOCA was not exercised conscientiously and with regard to all relevant considerations. The primary legal issues were whether the creditors would suffer prejudice if the DOCA was set aside, whether the Administrators had failed to consider certain claims, and whether the discretion should be exercised to set aside the DOCA.

The Court examined the evidence and found that the Administrators were aware of the proposed Fifth Transaction prior to their appointment and identified it as warranting scrutiny. However, the Administrators concluded that there was insufficient evidence to suggest the sale price was undervalued, and that pursuing a breach of duty claim against the Director would be difficult. The Court held that Britax had not established its case to the requisite standard, and that there was not a realistic prospect that a case against the Director for breach of directors’ duties would succeed. The Court also found that the casting vote was exercised conscientiously and with regard to all relevant considerations.

The Court concluded that the Administrators had exercised their discretion appropriately in recommending the DOCA, and that there was no basis to set aside the resolution of creditors. The Court emphasised the importance of the swift and practical nature of the administration process, and noted that the Administrators had acted within the constraints of that process.

The final orders of the Court were that the parties supply a draft form of orders implementing the conclusions contained in the judgment within 14 days from the date of the judgment. The entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.