In the matter of Recycling Holdings Pty Limited

[2015] NSWSC 1016

Supreme Court of NSW

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Interrogate

Catchwords

1. CORPORATIONS — voluntary administration — deed of company arrangement (DOCA) — application to terminate DOCA — whether material omissions from or misstatement in information provided to creditors — objective materiality of information — omission of information regarding company’s litigation — where litigation to be pursued if creditors vote in favour of DOCA — held, no material omission in relation to nature, prospects and status of litigation — where potential conflict between director’s interest in pursuit of litigation on behalf of company and his personal exposure as a cross-defendant — held, material omission — omission of information regarding potential liquidator’s claim to recover voidable transaction — held, material omission — whether court’s discretion should be exercised to terminate DOCA — where director despite potential conflict has demonstrated commitment to prosecution of company’s litigation — where possible claims to recover voidable transactions preserved if litigation fails to generate dividend of 100c — where no other creditor supports relief sought by plaintiffs in termination application — where plaintiff is defendant in company’s litigation — where majority of creditors are related creditors but have real interest in success of DOCA — where disclosure of omitted matters unlikely to affect votes of majority — whether public interest in full and accurate disclosure to creditors compromised by refusal to terminate DOCA — held, DOCA not to be terminated.
1. CORPORATIONS — voluntary administration — deed of company arrangement (DOCA) — application to terminate DOCA — whether DOCA unfairly prejudicial to creditors or contrary to interests of creditors as a whole — where DOCA allows for prosecution of litigation with prospect of generating 100c dividend for all creditors — where rights of creditors upon liquidation preserved if litigation does not generate 100c dividend — held, not unfairly prejudicial or contrary to creditors’ interests.
1. CORPORATIONS — voluntary administration — deed of company arrangement (DOCA) — whether DOCA void — whether omissions in information given to creditors invalidate DOCA — where basic requirements of Pt 5.3A satisfied — where clause in DOCA fails properly to reflect resolution of creditors’ meeting — held, clause of DOCA not in accordance with Part 5.3A and declared void — DOCA to be varied to reflect resolution.
1. CORPORATIONS — voluntary administration — administrators — removal of administrators — impartiality — whether bias to be apprehended from alignment of administrators with director in pursuing appointment with a view to DOCA — where pre-appointment process went beyond explanation of administration process — pre-disposition of administrators towards DOCA over liquidation — where creditors vote for DOCA and remaining functions of administrators are the administration of the DOCA — where applicant for removal is defendant in proceedings the prosecution of which is main purpose of DOCA — no reasonable apprehension of relevant bias.