Goyal (liquidator), in the matter of OLI 1 Pty Ltd (in liq)

The case involved a liquidator, Mr. Rahul Goyal, seeking approval from the court to enter into a funding agreement with a litigation funder, Premier Litigation Funding Pty Ltd, on behalf of OLI 1 Pty Ltd, a company in liquidation. The liquidators of OLI 1 sought approval under section 477(2B) of the Corporations Act 2001 for the acceptance of a funding offer from Premier Litigation Funding and to enter into a litigation funding deed with the funder. The application was made on paper due to the COVID-19 pandemic and the nature of the matter. The primary legal issue for the court was whether the liquidators' acceptance of the funding offer and proposed entry into the funding agreement constituted a proper exercise of their powers under the Corporations Act.

The court considered several factors in determining whether the liquidators' actions were appropriate. These factors included the prospects of success of the proposed litigation, the interests of creditors, the possibility of oppression, the nature and complexity of the cause of action, the extent to which other funding options were explored, the level of the funder's premium, and consultation with creditors. The liquidators had conducted investigations and formed the view that there were reasonable prospects of recovering the loan amount from the defendants, who were the only substantial asset of the company. The only creditor not associated with the defendants was the Deputy Commissioner of Taxation, whose debt exceeded the combined debt of the related party creditors. The liquidators had also explored funding options with the DCT but were unsuccessful. The premium sought by the funder was considered to be within the usual range. The liquidators had consulted with the DCT, the only non-related party creditor, and informed them of their intention to seek court approval instead of holding a creditors' meeting.

The court concluded that the liquidators' acceptance of the funding offer and proposed entry into the funding agreement was a proper exercise of their powers, considering all the relevant factors. The court approved the liquidators' actions and granted the orders sought, including confidentiality orders for certain documents to prevent prejudice to the proper administration of justice. The costs of the proceeding were ordered to be costs in the liquidation of the company.