Konekt Limited, in the matter of Konekt Limited (No 3)

In the Federal Court of Australia, Konekt Limited, in the matter of Konekt Limited (No 3), the court considered an application for approval of a scheme of arrangement involving Konekt Limited and its shareholders. The application was made under section 411 of the Corporations Act 2001 (Cth). The directors of Konekt Limited proposed to pay a special dividend contingent upon the scheme becoming effective. The scheme involved the company's borrowing to pay the special dividend, and the directors believed that this borrowing would not materially affect the company's ability to pay its creditors.

The legal issues before the court included whether the proposed scheme of arrangement complied with the relevant provisions of the Corporations Act, specifically sections 411, 260A, and 411(11). The court had to determine if the directors' view that the borrowing would not materially affect the company's ability to pay its creditors was reasonable and whether the scheme should be approved despite the proposed special dividend. Furthermore, the court needed to decide if Konekt Limited should be exempted from certain compliance requirements under section 411(11) of the Corporations Act.

The court found that the proposed scheme complied with the statutory requirements under section 411 of the Corporations Act. It held that the directors' view on the special dividend's impact on the company's ability to pay its creditors was reasonable, given the evidence presented. The court also granted the exemption from compliance with section 411(11) as requested. Consequently, the court approved the scheme of arrangement as set out in the application. The orders made pursuant to sections 411(4)(b) and 411(12) of the Corporations Act granted the approval of the scheme and exempted Konekt Limited from compliance with section 411(11). These orders were to be entered forthwith as per Rule 39.32 of the Federal Court Rules 2011.