A deed of company arrangement that offers a premium distribution (payment above 100 cents in the dollar) to creditors as an inducement to vote in favour of the deed is contrary to public policy and the policy of the Corporations Act, and will be terminated under s 445D. The practice of offering gratuities to creditors to achieve results at creditors' meetings opens a fertile field for abuse and is impermissible. Administrators exercising casting votes under reg 5.6.21 must weigh all relevant factors; there is no rule that the casting vote should follow the numerical majority. Administrators proposing litigation against a creditor should disclose either the factual basis of the claim or the full legal advice (subject to undertakings) to the creditors' meeting.
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