Re Lewis

The case of Re Lewis involves an application by the liquidators of Concrete Supply, Mr Lewis and Mr Kidman, for approval to enter into a retainer with Lipman Karas, who have represented the largest creditor of Concrete Supply, Adelaide Brighton Cement Limited (ABCL). The application was made under section 477(2B) of the Corporations Act 2001 (Cth) and clause 90-15 of the Insolvency Practice Schedule (Corporations). The primary legal issues were whether section 477(2B) applied to the retainer between the liquidators and Lipman Karas, whether approval should be granted retrospectively, and whether there would be prejudice to the liquidators' independence.

The court considered that it was reasonably arguable that the liquidators were acting as agents for Concrete Supply by entering into the retainer, the services under the retainer would primarily benefit Concrete Supply, and it was appropriate for the court to act cautiously. The court found that the liquidators had a reasonable basis to believe that retaining Lipman Karas was in the interests of Concrete Supply, the terms of the retainer were clear, and the fees were consistent with commercial rates. The nature of the work and its duration made it unlikely to be completed within the three-month period specified in section 477(2B). The court decided to grant the approval retrospectively, taking into account the disruptions caused by the COVID-19 pandemic. The application for an extension of time was not necessary as the court found that section 1322(4)(d) did not apply in the circumstances.

The final orders included granting the liquidators approval to enter into the retainer with Lipman Karas, directing that the liquidators would be justified in entering into the retainer, and that the costs of the application were costs in the winding up of Concrete Supply and could be paid from its assets.