The Court held that a deed of company arrangement executed by a hopelessly insolvent company for the purpose of preserving its rights under the SOP Act (and thereby avoiding the prohibition in s 32B on claimants in liquidation) is not entered into for an improper purpose warranting termination under s 445D(1)(g) of the Corporations Act, where the DOCA's purpose is to maximise the return to creditors. The policy of s 32B is confined to its express terms — denying SOP Act rights to companies 'in liquidation' — and cannot be expanded by reference to the Murray Report or second reading speech to encompass all insolvent companies. The Court also held that exercising SOP Act rights in these circumstances does not constitute an abuse of process, particularly where the DOCA preserves the respondent's right to recover payments through a trust mechanism. The Court left open, but expressed a favourable view toward, the proposition that even without such a trust mechanism, the appropriate remedy would be a stay of enforcement rather than termination of the DOCA.
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