Liguori v Golden Fund Limited

Liguori v Golden Fund Limited was an application for approval of a proposal made by Alfonso Liguori to his creditors. The proposal was for Mr Liguori to make payments to creditors from the earnings of a hairdressing business that he had recently established. The proposal was approved by all but one of the creditors. The one creditor still opposing, Mr Francesco Bartoli, contended that the proposal was not achievable, it still represented a risk to future creditors, and it was not in the public interest for Mr Liguori (who was clearly and substantially insolvent) to be allowed to pursue further business activities rather than be put into bankruptcy. Mr Bartoli also opposed the application on the ground that the matter had been determined by the earlier judgment. The court was required to decide whether the application was barred by issue estoppel, whether the terms of the proposal were "not reasonable" or "not calculated to benefit the general body of creditors", and whether there was any reason that it was not expedient to approve the proposal. The court found that the present application was not estopped by the judgment on the first proposal, that there was no reason not to approve the proposal on the basis that it was not reasonable, and that there was no reason to decline to approve the proposal on the grounds of expediency. The proposal was approved, subject to the following conditions: the trustee was to investigate and file a report within 20 working days as to whether the business was now (more than six months after the start date) generating sufficient revenue to fund the proposal; Mr Liguori was to file and serve an affidavit, also within 20 working days, confirming that all GST tax returns had been filed up to that date, and that any GST payable had been paid (copies of the GST returns were to be exhibited); and proving the engagement of a chartered accountant to supervise the financial management of the business over the term of the proposal, and to be co-signatory of all cheques. The approval of the proposal will lapse if the business was not now generating sufficient revenue to fund the proposal or if these conditions were not met in any other respect. If the conditions were met, the proposal was to take effect according to its terms.