Seafarms Group Limited v McKinnon

The matter of Seafarms Group Limited v McKinnon was before the Court, where Seafarms, the parent company, sought to recover funds from the administrators following the termination of a deed of company arrangement (DOCA). Seafarms argued that the right to recover the funds was an accrued right that remained enforceable after the termination of the DOCA. Alternatively, Seafarms submitted that the DOCA created a trust in its favour. The administrators, on the other hand, sought a declaration that any liability to make payments to Seafarms could be indemnified from the funds held by them. They also sought remuneration and indemnification for certain expenses and disbursements. Additionally, the liquidators sought leave to be appointed as voluntary administrators and for the winding up to be stayed, to allow for consideration of a second proposed DOCA.

The Court had to determine whether the clause in the DOCA relied upon by Seafarms survived the termination of the DOCA, and whether the DOCA created a trust in favour of Seafarms. Furthermore, the Court had to decide whether the administrators were liable to make any payments to Seafarms, and if any amounts owed could be indemnified. The Court also needed to consider whether the liquidators should be appointed as voluntary administrators and whether the company should go back into voluntary administration. Finally, the Court had to decide whether remuneration and expenses could be paid out of the fund held by the administrators.

The Court found that the clause in the DOCA relied upon by Seafarms did not survive the termination of the DOCA, and that the DOCA did not create a trust in favour of Seafarms. The Court held that the administrators were not liable to make any payments to Seafarms, and that any amounts owed could not be indemnified. The Court refused to appoint the liquidators as voluntary administrators and denied the application to stay the winding up. The Court also found that remuneration and expenses could be paid out of the fund held by the administrators, subject to agreement by the parties.

The Court ordered that the parties bring in a form of order reflecting the Court’s reasons and that the Court would hear from the parties in respect of costs.