MFS Alternative Assets (in liquidation) v Angstrom Assets Pty Limited

[2012] NSWSC 447

Supreme Court

New South Wales

Medium Neutral Citation:	MFS Alternative Assets (in liquidation) v Angstrom Assets Pty Limited [2012] NSWSC 447
Hearing dates:	12 March 2012
Decision date:	12 March 2012
Jurisdiction:	Equity Division - Corporations List
Before:	Black J
Decision:	The Defendant company be wound up. Katherine Elizabeth Barnet and William John Fletcher be appointed official liquidators of the Defendant company. Costs to be paid out of the assets of the Defendant company.
Catchwords:	CORPORATIONS - Winding up - Application for order under s 461(1)(a) of Corporations Act 2001 (Cth) to wind up Defendant company - Whether requirements for order are satisfied.
Legislation Cited:	- Corporations Act 2001 (Cth) ss 461(1)(a), 461(1)(k), 465A(a), 470(1)(a), 1322(4)(d) - Evidence Act 1995 (NSW) s 160 - Supreme Court (Corporations) Rules 1999 (NSW) r 5.6
Cases Cited:	- Hillig v Darkinjung Pty Ltd [2006] NSWSC 1371; (2006) 205 FLR 450 - Re Kala Capital Pty Ltd [2011] NSWSC 1253
Category:	Principal judgment
Parties:	MFS Alternative Asset Limited (in liquidation) (Plaintiff) Angstrom Assets Pty Limited (Defendant)
Representation:	Counsel: S.W. Aspinall (Plaintiff) Solicitor: Henry Davis York (Plaintiff)
File Number(s):	12/19183

Judgment- EX TEMPORE

1. The Plaintiff, MFS Alternative Assets Limited (in liquidation) ("MFS AAL"), is the sole shareholder in Angstrom Assets Pty Ltd ("Angstrom") and applies for an order that Angstrom be wound up under s 461(1)(a) or alternatively s 461(1)(k) of the Corporations Act 2001 (Cth). Ms Barnet and Mr Fletcher are the joint liquidators of MFS AAL and other significant members of the MFS Group and have consented to be appointed as liquidators of Angstrom. There was no appearance for Angstrom which, it appears from the correspondence in evidence before me, does not oppose the application.

1. MFS AAL acquired assets in certain financial businesses, including an entity known as Fortitude Capital in 2006-2007 and, in June 2010, exchanged its shares in Fortitude Capital for shares in a new entity, Aurora Funds Ltd, which were then transferred by MFS AAL to Angstrom. Ms Barnet's evidence is that she believes the transfer took place for no or nominal consideration.

1. The order for winding up is sought under s 461(1)(a) of the Corporations Act in order to facilitate the realisation of MFS AAL's assets. Evidence has been placed before me of the liquidator's belief that it is more convenient to proceed by way of court-ordered liquidation under s 461(1)(a) than by a creditors' voluntary winding up. A special resolution was passed on 3 January 2012 by MFS AAL as the sole member of Angstrom that Angstrom be wound up by the Court and Ms Barnet and Mr Fletcher be appointed as liquidators.

1. The Court's power to order a winding up under s 461(1)(a) of the Corporations Act was considered in Hillig v Darkinjung Pty Ltd [2006] NSWSC 1371; (2006) 205 FLR 450 at 458 and more recently in Re Kala Capital Pty Ltd [2011] NSWSC 1253 at [6]-[7], where Barrett J observed that the Court would not generally exercise its discretion against making a winding up order under the section unless the shareholders' decision or surrounding circumstances involved something unconscionable or inequitable or some special consideration adversely affecting the creditors indicated that there should be no winding up; and the availability of the alternative of voluntary winding up by special resolution is not a reason for declining to make a winding up order under s 461(1)(a) of the Corporations Act. No such factor indicating that a winding up order should not be made consequential upon the shareholder resolution is present in this case. The sole director of Angstrom has advised the liquidator of MFS AAL that Angstrom has no objection to winding up, is solvent, and that he does not object to the appointment of Ms Barnet and Mr Fletcher as liquidators of Angstrom.

1. The formal requirements for the application are satisfied and the liquidators' consents have been filed and served. Notice has been published as required by r 5.6 of the Supreme Court (Corporations) Rules 1999 (NSW). A notice under s 465A(a) was lodged with ASIC, although that notice was lodged outside the time specified in s 470(1)(a) by reason of delays arising from difficulty in serving the application upon the director of Angstrom. I am satisfied that this is a proper case to extend the time for lodgement of that notice by order made under s 1322(4)(d) of the Corporations Act.

1. Ms Barnet's evidence acknowledges that she and Mr Fletcher have been appointed as liquidator to a number of related entities within the Octaviar Group and that their enquiries indicate that those entities were operated on a group basis. Ms Barnet and Mr Fletcher have undertaken significant subsequent work, including documentary review, public examinations and other work in that capacity and, Ms Barnet indicates, have a detailed understanding of the operation of the group. There are plainly practical advantages in the appointment of Ms Barnet and Mr Fletcher and Ms Barnet rightly recognises that the liquidators can seek directions from the Court or apply to the Court for appointment of a special purpose liquidator if any conflict of interest arises from their appointment to multiple entities in the group.

1. An alternative application was brought to wind up Angstrom under s 461(1)(k) of the Corporations Act. It is not necessary to deal with that application in circumstances that there is jurisdiction to, and reason to, make an order for winding up under s 461(1)(a) of the Corporations Act. Accordingly, the Court orders that:

1. The Defendant company, Angstrom Assets Pty Ltd, be wound up under the Corporations Act 2001 (Cth).

2. Katherine Elizabeth Barnet of xxxxx xxx x xxxxxx xxxxxx, Sydney NSW 2000 and William John Fletcher of xxxxx xx xxx xxxxxx xxxxxx, Brisbane QLD 4000 be appointed, jointly and severally, as the official liquidators of the Defendant company.

3. Time for lodgement of notice under s 465A(a) of the Corporations Act 2001 (Cth) be extended to 6 February 2012.

4. The Plaintiffs' costs of this application be paid out of the assets of the Defendant.

5. To the extent necessary, there be leave to enter the orders forthwith.

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