Re Intag International Limited and the Corporations Law

[1999] NSWSC 571

CITATION:	Re Intag International Limited & The Corporations Law [1999] NSWSC 571
CURRENT JURISDICTION:	Equity Division
FILE NUMBER(S):	1144/99
HEARING DATE(S):	02/06/99
JUDGMENT DATE:	2 June 1999
PARTIES :	Anthony Milton Sims (Applicant)
JUDGMENT OF:	Young J

COUNSEL :	Solicitor for Applicant (Administrator): Ms L Massey (Dunhill Madden Butler)
SOLICITORS:
CATCHWORDS:	Corporations [187]; Administration; Application that liquidator become administrator; Principles involved
ACTS CITED:	Corporations Law s 436B(2)
CASES CITED:	Re Depsun Pty Ltd (1994) 13 ACSR 644 Waste Recycling and Processing Services of NSW v Local Government Recycling Co-operative [1999] NSWSC 507
DECISION:	See para 11

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

YOUNG, J

WEDNESDAY 2 JUNE 1999

1144/99 - RE INTAG INTERNATIONAL LTD & THE CORPORATIONS LAW

JUDGMENT
1 HIS HONOUR : This is an application under s 436B(2) of the Corporations Law for leave for the liquidator to be appointed administrator.
2 The liquidator was appointed by the court, it would appear, in the random manner in which A List liquidators are appointed on a summons to wind up on insolvency. The liquidator's appointment was made on 22 March 1999.
3 The liquidator has worked on the accounts of the company in order to see the best return for the unsecured creditors. That has been a difficult matter because the assets are intellectual property and other intangibles located offshore which are hard to value. He has however arranged for a "deal" to be made with a company that is willing to pay a sum of $1 million, provided that the company goes into administration.
4 When the matter was brought before me this morning, today being Wednesday, I was as suspicious as I normally am of a company application that is brought hurriedly otherwise than on a Monday, because unless matters are very urgent they should be brought before the Company Judge on a Monday because they can be dealt with there much more efficiently than in the Duty Judge’s List. However, I was assured that the matter was very urgent and I have considered it during the day.
5 I considered the purpose of the section in Re Depsun Pty Ltd (1994) 13 ACSR 644 and there reached the view that it was necessary at this stage to consider matters of public interest, and so the court not only considers the mechanical matter of whether there should be leave for the same person to act as liquidator and administrator, but also what is the purpose of going into administration and whether in due course there is a fair prospect of the company coming out of liquidation.
6 There have been decisions on the section since, but I do not believe that in general they have departed from that view. In other words, the same sort of enquiry is made as when one is considering whether to adjourn a winding up application upon an administrator being appointed; see eg Waste Recycling and Processing Services of NSW v Local Government Recycling Co-operative [1999] NSWSC 507.
7 Essentially, the court when considering these applications looks at the following matters: (a) is the company insolvent? (b) if it is insolvent can it be salvaged? (c) if it can be salvaged is the proposed scheme for salvation prima facie one that will benefit the creditors? and (d) is the proposed scheme contrary to the public interest?
8 When I first looked at the figures this morning, doubtless because of the small amount of time that was given to prepare, I was not satisfied of these matters.
9 Having heard oral evidence from the liquidator this afternoon it would seem that the answer to the first three questions is yes and that on the information available at this stage the scheme passes the fourth test as well.
10 However, as the liquidator mentioned in the witness box, these matters will need to be reconsidered at the time when the proposed deed of arrangement is settled and when an application is made to the court to terminate the winding up. It is useful to know and it should be part of the evidence in every one of these cases that the liquidator has turned his mind to these matters, as I am satisfied this liquidator has.
11 Accordingly, I will make the order asked in the motion, that is order 2 of the notice of motion of 2 June 1999. The costs of the application are to be costs in the winding up. However, this order is not in anyway to preclude the judge who finally hears the application to stay the winding up assessing from scratch the question as to whether the arrangement is in the public interest.
oOo

Last Modified: 06/09/1999