Chan v Four C Realty Pty Ltd (in liq), in the matter of Four C Realty Pty Ltd (in liq) (No 2)

The case of Chan v Four C Realty Pty Ltd (in liq), in the matter of Four C Realty Pty Ltd (in liq) (No 2) was heard in the Supreme Court of Victoria. The primary issue before the court was whether to grant approval under section 477(2B) of the Corporations Act 2001 (Cth) for the liquidators of Four C Realty Pty Ltd to proceed with the sale of the business to Ms Chan, despite objections from other interested parties. Four C Realty Pty Ltd, an estate agency, was placed into liquidation in 2013. The liquidators sought to sell the business through an Expression of Interest campaign, which resulted in Ms Chan submitting a bid. However, other interested parties, including Mr and Mrs Huang, contested the sale and sought to have the court reopen the sales process. The court needed to determine whether it was in the best interests of the creditors and members of Four C Realty Pty Ltd to approve the sale to Ms Chan or to reopen the sales process.

The court considered the submissions from both sides, with a particular focus on the obligations of the liquidators and the potential impact on creditors and members. The court noted that the liquidators had an obligation to act in the best interests of creditors and members, which included exercising commercial judgment and achieving the best price reasonably obtainable. However, the court rejected the argument that the liquidators were obligated to achieve the best price, as this obligation only applied to receivers under section 420A of the Corporations Act. The court also considered the potential for further delay and the impact on the value of Four C Realty Pty Ltd’s assets. Given that the majority of the outstanding contracts were expected to settle that year and that there was a real possibility of a distribution to unsecured creditors, the court found that reopening the sales process was not in the best interests of creditors and members. The court concluded that certainty was preferable to speculative possibilities, and that further delay would likely diminish the value of the assets.

The court granted approval, nunc pro tunc, to the liquidators to enter into the contract with Ms Chan, finding that it was in the best interests of creditors and members to proceed with the sale as planned. The court rejected the objections of the other interested parties and confirmed that the liquidators were not required to achieve the best price reasonably obtainable. The court emphasized the importance of achieving certainty and minimizing further delay in the sale process. The liquidators were granted approval to proceed with the sale to Ms Chan, and the court dismissed the application to reopen the sales process.