Pascoe (Liquidator), in the matter of Matrix Group Ltd (in liq) (Trustee)

The case involves the liquidator of Matrix Group Ltd, which was placed into liquidation in February 2008 due to a judgment debt in favour of Tom Oates. The liquidator applied for approval under section 477(2B) of the Corporations Act 2001 (Cth) to enter into a funding agreement on behalf of Matrix in liquidation. This application was made in the context of a long-standing dispute between the liquidator and Mr Oates regarding his entitlements under a prior funding agreement (the Oates funding agreement). The central legal issues revolved around whether the funding deed should be approved by the court and, if so, under what terms. Specifically, the court had to decide whether to grant the liquidator's application for approval of the funding deed and whether to grant Mr Oates' application for relief concerning his rights under the Oates funding agreement.

The court assessed the liquidator's application by considering the purposes of the powers of a liquidator, which include the recovery of funds for the benefit of creditors. The court held that the liquidator's decision to seek funding was a proper exercise of power, given the urgency to pursue the proposed proceeding before the limitation periods expired. The court found that the funding deed represented the last opportunity to pursue the proposed proceeding with adequate protection against adverse costs. The court also noted that without the approval of the funding deed, Matrix would not be able to commence the proposed proceeding, and there would be no prospect of any return to Matrix’s creditors. The court dismissed Mr Oates' application for relief, finding that there was no utility in determining the status of the Oates funding agreement at that time.

The court granted the liquidator's application for approval of the funding deed, subject to the condition that Mr Oates be consulted in connection with any proposed settlement of the proposed proceeding. The court held that the liquidator must notify Mr Oates of the nature and value or amount of any recoveries or property realized in connection with the proposed proceeding. Additionally, the liquidator must not distribute or pay any recoveries ahead of Mr Oates unless Mr Oates agrees or the court otherwise orders. The court did not find it necessary to determine the status of the Oates funding agreement at that time, as the liquidator's opinion that the funding deed represented the last opportunity to pursue the proceeding was accepted.