CORPORATIONS — where administrators appointed over defendant companies shortly before delivery of judgment on plaintiff’s application for the appointment of provisional liquidators — where director of defendant companies made an application prior to the delivery of judgment to adjourn the plaintiff’s application — where administrators did not appear on the adjournment application — where defendant indicated an intention to propose a deed of company arrangement but no details of such proposal were provided to the Court — where there were public interest grounds in favour of the plaintiff’s application for the appointment of provisional liquidators — whether there was a basis for the Court to be satisfied that it was in the interests of the defendant companies’ creditors for those companies to continue under administration rather than have provisional liquidators appointed — adjournment application refused
Quick Take
1Under s 440A(3) of the Corporations Act, the onus lies on the party resisting the appointment of provisional liquidators to satisfy the court that the interests of creditors are better served by continuing administration; mere speculation about a possible DOCA, without any details or evidence, is insufficient to discharge that onus.
2Where administrators are appointed as a last-resort response to imminent adverse judgment in winding-up proceedings, the court approaches the appointment with scepticism as to whether it is a genuine attempt to benefit creditors or merely an attempt to avoid the consequences of liquidation.
3Strong public interest considerations underpinning the appointment of provisional liquidators — including concerns about management, financial records and business operations — may independently preclude the court from being satisfied that continuation of administration is in creditors' interests.
