In the matter of Novo Tank Pty Limited (in liquidation) ACN 050 210 823

Novo Tank Pty Limited, a company in liquidation, applied to the court for approval of a litigation funding agreement under section 477(2B) of the Corporations Act. The company also sought an extension of time to pursue orders in relation to voidable transactions. The Commonwealth was identified as a priority creditor in the winding up of the company. The court had to determine whether the proposed litigation funding agreement was in the interests of the company's creditors and whether the extension of time was justified.

The primary legal issue was whether the proposed litigation funding agreement, which provided for the funder to receive 50% of any recovery, was in the interests of the company's creditors. The court had to assess the strength of the arguable case in the proposed litigation and consider the impact of the Commonwealth's status as a priority creditor. Additionally, the court needed to determine whether the extension of time, which was a short period and specifically targeted certain defendants, was appropriate and whether the proposed defendants opposed the application.

The court found that the proposed litigation funding agreement was in the interests of the company's creditors, given the strongly arguable case in the litigation and the likelihood of recovery. The court also considered the Commonwealth's status as a priority creditor but concluded that the agreement would not adversely affect the priority creditor's rights. Regarding the extension of time, the court found that the short extension was reasonable, especially since the proposed defendants did not appear to oppose the application.

The court approved the entry into the litigation funding agreement and granted the extension of time for the company to seek orders in relation to voidable transactions. These orders allow the company to pursue specific defendants within the extended timeframe.