There are three things prudent insolvency practitioners
can do when left with non-company assets.
A not too infrequent issue for insolvency practitioners: what
can you do with unclaimed assets of third parties? Clayton Utz
recently acted for the receivers and managers of Arcabi Pty Ltd (In
Liquidation) (Receivers and Managers Appointed) (known as "The
Rare Coin Company") and developed a strategy to deal with the
The company sold rare coins and bank notes to investors and
entered into arrangements to store these goods at the Company's
In July 2013, receivers were appointed to the company. Over
1,600 investors stored or consigned goods with the company. It was
the receivers' task to review the company records and separate
company-owned stock from Investors' stock. The receivers
requested information and documentation from investors.
The potential implications of the Personal Property Securities
Act 2009 (Cth) relating to goods held by the company in a bailment
arrangement and on consignment, meant that the receivers sought
directions from the Supreme Court of Western Australia that they
were justified in returning certain investors' goods. These
directions were granted in December 2013.
The unclaimed goods
By April 2014, the receivers had still not been contacted by all
of the investors. In an effort to find each of the investors listed
in the company's records, the receivers:
sent nine separate letters/circulars to the investors'
addresses recorded in the company's records;
sent one letter to the Investors' addresses recorded in
company records and the Australian Electoral Commission's
published two advertisements in each of The West Australian and
The Australian newspapers.
Despite these efforts, the receivers did not receive claims from
a number of investors.
The receivers also contacted the Commissioner of Police as
required under the Disposal of Uncollected Goods Act 1971 (WA).
The directions sought
The receivers sought directions from the Court that:
it would be appropriate for the receivers to treat the goods
that remain unclaimed as property of the company; and
the receivers would be justified in distributing the balance of
the proceeds of the sale of the goods in the ordinary course of the
The Master granted the directions sought by the receivers. The
Master agreed that the receivers were justified in selling the
unclaimed goods and holding the proceeds for six months before
distributing the balance of the proceeds in the course of the
First, the applicants in Hastie were administrators, not
receivers. Unlike the administrators, the Receivers could not rely
on section 442 of the Corporations Act 2001 (Cth).
Secondly, Hastie concerned property that was probably owned by
one of the group companies, with a third party security interest
attached, whereas Rare Coins concerned property that appeared to be
owned by third parties. For this reason, the receivers also
referred the Court to another decision involving property which was
not company property – International Art Holdings Pty Ltd
(Administrators Appointed) v Adams  NSWSC 164.
In International Art, Justice Yates declined to make a
declaration as to the ownership of certain unclaimed artworks on
the basis that he was not satisfied the claimants had abandoned any
interest in the artwork at that point in time.
In this case, the receivers successfully submitted that these
investors had abandoned any interests in the unclaimed goods on the
basis that the investors had not made a claim after over 10 months,
despite the receivers' numerous attempts to contact them. It
provides more certainty to controllers, allowing them to quickly
fulfil their roles without being left with open-ended liabilities
(or never ending administrations). Of course, repeated efforts to
find the apparent owners must be made before the orders will be
This case is useful for insolvency practitioners who are left
with non-company assets. In summary, it would seem prudent for
insolvency practitioners to:
contact the probable owners of the goods and publish at least
two advertisements before seeking directions to sell unclaimed
non-company assets; and
follow the spirit of the procedures described in the Disposal
of Uncollected Goods Act in relation to unclaimed non-company
assets by contacting the Commissioner of Police.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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When determining if a DOCA is to be terminated, public interest can, and often will, outweigh any benefit to creditors.
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