In the matter of HCAFE Chatswood Pty Ltd

HCAFE Chatswood Pty Ltd was a company in which two substantial shareholders held all of the shares. The shareholders had been in dispute over the company’s management for some time. The company had not traded for some time and was in financial difficulty. The liquidators of the company applied to the court to be appointed as provisional liquidators. The shareholders opposed the application on the basis that the company did not require a provisional liquidator.

The court needed to determine whether there was a sufficient basis to appoint provisional liquidators. The court found that there was a need to appoint provisional liquidators in order to preserve the company’s assets and prevent the substantial shareholders from removing any of the company’s assets. The court accepted that the company was in financial difficulty and that the substantial shareholders were in dispute over the management of the company.

Accordingly, the court found that there was a sufficient basis to appoint provisional liquidators. The court accepted that the exclusion of the substantial shareholders from management was a relevant consideration in determining whether to appoint provisional liquidators. The court found that the exclusion of the shareholders from management was appropriate in the circumstances, as the shareholders were in dispute and there was a risk that the company’s assets would be dissipated if the shareholders were able to manage the company.

The court appointed the liquidators as provisional liquidators of the company.