Re Jabiru Satellite Ltd (in liq) and NewSat Ltd (in liq)

The parties involved in this case are the liquidators of two companies, Jabiru Satellite Ltd and NewSat Ltd, which are in liquidation. The liquidators sought the appointment of a special purpose liquidator to conduct certain proceedings based on a funding agreement that provided for a funding fee of 70% of the net resolution sum. The funder, however, had minimal assets and contended that it would not support the proceedings on any other basis. The dispute was heard in the Federal Court of Australia. The legal issues before the court were whether a special purpose liquidator should be appointed to conduct certain proceedings based on the funding agreement and whether the funder's minimal assets and refusal to support the proceedings on any other basis should be taken into account when making this decision.

The court considered whether the funder's minimal assets and refusal to support the proceedings on any other basis should be taken into account when deciding whether to appoint a special purpose liquidator. The court held that these factors should be considered, as they could impact the prospects of the proceedings being pursued and the interests of other stakeholders. The court also considered the funding agreement, which provided for a funding fee of 70% of the net resolution sum, and the fact that the prospects of the proceedings being pursued were not exposed to third party funders. The court found that these factors did not necessarily preclude the appointment of a special purpose liquidator, but they did need to be taken into account in the decision-making process.

The court ultimately decided that a special purpose liquidator should not be appointed to conduct the proceedings. The court found that the funder's minimal assets and refusal to support the proceedings on any other basis, combined with the high funding fee and the lack of exposure to third party funders, made it unlikely that the proceedings would be successful and in the best interests of other stakeholders. The court also noted that the liquidators had not demonstrated that the appointment of a special purpose liquidator was necessary to achieve a better outcome for the companies in liquidation and their creditors.

No special purpose liquidator was appointed to conduct the proceedings, and the liquidators were directed to continue with the proceedings in their existing capacity. The court also ordered that the liquidators take into account the funder's minimal assets and refusal to support the proceedings on any other basis when making future decisions about the pursuit of the proceedings.